G. Ltd. produces a product which has a monthly demand of 4,000 units. The product requires a
Question:
G. Ltd. produces a product which has a monthly demand of 4,000 units. The product requires a component X which is purchased at Rs. 20. For every finished product, one unit of component is required. The ordering cost is Rs. 120 per order and the holding cost is 10% p.a.
You are required to calculate:
(i) Economic order quantity.
(ii) If the minimum lot size to be supplied is 4,000 units, what is the extra cost, the company has to incur?
(iii) What is the minimum carrying cost, the company has to incur?
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i Computation of Economic Ordering Quantity where U Annual Consumption P Cost of Placing an Ord...View the full answer
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