X Ltd manufactures a product which has a monthly demand of 2,500 units. The product requires a component AA1, which is purchased at Rs. 10. For every fi nished product, one unit of component is required. The ordering cost is Rs. 100 per order and the holding cost is 10% p.a. You are required to calculate:

(a) Economic ordering quantity

(b) If the minimum lot size to be supplied is 5,000 units, what is the extra cost the company has to incur?

(c) What is the minimum cost the company has to incur?