X Ltd is committed to supply 24,000 bearings per annum to Y Ltd on a steady basis.
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X Ltd is committed to supply 24,000 bearings per annum to Y Ltd on a steady basis. It is estimated that it costs 10 paise as inventory–holding cost per bearing per month and that the set–up cost per run of bearing manufacture is Rs. 324.
(a) What would be the optimum run size for bearing manufacture
(b) Assuming that the company has a policy of manufacturing 6,000 bearings per run, how much extra costs the company would be incurring as compared to the optimum run suggested in
(a) above?
(c) What is the minimum inventory holding cost?
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