2. A factory follows an economic order quantity system for maintaining stocks of one of its component requirements. The annual demand is for 24,000 units, the cost of placing an order is Rs 300, the component cost is Rs 60 per unit. The factory has imputed 24% as the inventory carrying rate.

(i) Find the optimal interval for placing orders, assuming a year is equivalent to 360 days.

(ii) If it is decided to place only one order per month, how much extra cost would the factory incur per year as a consequence of this decision? (DMS, Mumbai, 1998)