A company manufactures a single product, which requires two components. The company purchases one of the components from two suppliers: X Limited and Y Limited. The price quoted by X Limited is? 180 per hundred units of the component and it is found that on an average 3 per cent of the total receipt from this supplier is defective. The corresponding quotation from Y Limited is 174 per hundred units, but the defective would go up to 5 per cent. If the defectives are not detected, they are utilized in production causing a damage of 180 per 100 units of the component. The company intends to introduce a system of inspection for the components on receipt. The inspection cost is estimated at 24 per 100 units of the component. Such an inspection will be able to detect only 90 per cent of the defective components received. No payment will be made for components found to be defective in inspection. Required: Advise whether inspection at the point of receipt is justified? Which of the two suppliers should be asked to supply? (Assume total requirement is 10,000 units of the component). [Nov 07]