PROBLEM 4: (PRINTED SOLUTION AVAILABLE) A Company has an annual demand from a single customer for 50,000 litres of a paint product. The total demand can be made up of a range of colour to be produced in a continuous production run after which a set-up of the machinery will be required to accommodate the colour change. The total output of each colour will be stored and then delivered to the customer as single load immediately before production of the next colour commences. The Set up costs are Rs. 100 per set up. The Service is supplied by an outside company as required. The Holding costs are incurred on rented storage space which costs Rs. 50 per sq meter per annum. Each square meter can hold 250 Litres suitably stacked. You are required to calculate i) Calculate the total cost per year where batches may range from 4,000 to 10,000 litres in multiples of 1,000 litres and hence choose the production batch size which will minimize the cost. ii) Use the economic batch size formula to calculate the batch size which will minimise total cost