what would be the optimum run size for bearing manufacture 617166
X Ltd is committed to supply 24,000 bearings per annum to Y Ltd on a steady basis. It is estimated that it costs 10 paise as inventory–holding cost per bearing per month and that the setup cost per run of bearing manufacture is Rs. 324.
- What would be the optimum run size for bearing manufacture
- Assuming that the company has a policy of manufacturing 6,000 bearings per run, how much extra costs the company would be incurring as compared to the optimum run suggested in (a) above?
- What is the minimum inventory holding cost?