Particulars Order Ordor Order Order Order Size Size Size Size Size 1 Annual Consumption 8,000 8,000 8,000 8,000 8,000 ll Order size (units) 400 500 1,600 4,000 8,000 III No of orders (1/11) 20 16 5 2 1 IV Cost per order (Rs.) 12 12 12 12 12 V Total ordering cost 240 192 60 24 12 (Rs.) (III XIV) VI Average Inventory 200 250 800 2.000 4,000 (units) VII Carrying cost per 2.4 2.32 2.28 2.24 unit (Rs.) 20% VIII Total carrying cost 480 590 1856 4560 8960 (Rs.) (V+VII) IX Total cost of 720 782 1916 4584 8972 ordering & carrying (V + VIII) X Purchase Price (Rs.) 96,000 84,400 92,800 91,200 89,600 Total (IX + x) 96,720 95,182 94,716 95.784 98,572 The E0 is 1600 units. As the purchase price varies total cost is considered: 2.36 U19 A company is considering the possibility of purchasing from a supplier a component it now makes. The supplier will provide the components in the necessary quantities at a unit price of Rs. 9. Transportation and storage costs would be negligible. The company produces the component from a single raw material in economic lots of 2,000 units at a cost of Rs. 2 per unit. Average annual demand is 20.000 units. The annual holding cost is Rs. 0.25 per unit and the minimum stock level is set at 400 units. Direct labour costs for the component are Rs. 6 per unit, fixed manufacturing overhead is charged at a rate of Rs. 3 per unit based on normal activity of 20,000 units. The company also hires the machine on which the components are produced at a rate of Rs. 200 per month Should the company make the component