6. A company uses a certain component at the rate of 8,000 units per year. Each component part is valued at Rs 18. The company estimates that the cost of holding inventory is 20% of the value of the item, per year. The company has the option to produce the part on either of the two machines, A or B.

Machine A has a set-up cost of Rs 200, machine B has a set-up cost of only Rs 100. However, it costs 10 paise more per unit to produce using the machine B than it does using machine A. That is to say, the cost of producing the part on machine B would equal Rs 18.10 per unit.

Which machine should the company use? What is the optimum lot size?