A service garage uses 120 boxes of cleaning cloths a year, Ask an Expert

Management Studies

A service garage uses 120 boxes of cleaning cloths a year. The boxes cost $6 each. Ordering cost is $3 and holding cost is $0.80 per unit on an annual basis. It works 300 days a year. Lead time is 10 days and standard deviation the demand during lead time is 4 boxes. The manager wants to achieve 90% service level.

a) What is the economic order quantity for cleaning cloths?

b) When should the cleaning cloths be reordered?

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Operation Management, Management Studies

Category:- Operation Management
Reference No.:- M93132248

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