(a) At present a company purchases an item X from outside suppliers. The consumption of this item is 10,000 units/year. The cost of the item is Rs 5 per unit and the ordering cost is estimated to be Rs 100 per order. The cost of carrying inventory is 25 per cent. If the consumption rate is uniform, determine the economic purchasing quantity. (b) In the above problem assume that company is going to manufacture the item with the equipment that is estimated to produce 100 units per day. The cost of the unit thus produced is Rs 3.50 per unit. The set-up cost is Rs 150 per set-up and the inventory carrying charge is 25 per cent. How has your answer changed? [Jammu Univ, M, 1990]