A service garage uses 120 boxes of cleaning cloths per year. The boxes cost $6 each. Ordering cost is $3 and holding cost is 10 percent of purchase cost per unit on annual basis.
Determine:
a. Economic Order Quantity?
b. Total cost of carry cleaning cloths? (excluding purchase price)
c. Average Inventory?
d. The annual cost of ordering and carrying cloth?
e. If the supplier offered a price of $5 per box and if all 120 boxes were ordered at the same time, should the garage take the order?