A pottery company required 3500 tonnes of clay per annum to produce garden pots and the cost per order was $100 and the carrying cost was $0.80 per tonne. Lead time is 2 months and usage may vary from 320 maximum to 180 minimum per month.

Required:

a) What would be the economic order quantity of clay (how many tonnes at a time should be ordered)?

b) What would be the reorder point of their clay stocks? (in tonnes)