27. Company A wants to know that production cost its major competitor, Company B, has assigned to product item P7• After a bit of investigation, Company A has collected the following data about company B's production of item P 7:

Company A has further learnt that company B produces according to 'economic lot size' model. What is company B's cost of producing product item P7? (M Com, Delhi, 1999)

Transcribed Image Text:

Production-lot size Set-up cost Annual demand Daily demand Production rate Inventory holding cost 2,600 units Rs 135 30,000 units 100 units 200 units per day 28% of the average value per year