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Illustration 1: Compute The Economic Batch Quantity For A Company Using Batch Costing With The Following Information

The document provides information and instructions for calculating economic batch quantities and optimal batch sizes for three different production scenarios. For the first scenario, the annual demand is 24,000 units and the largest batch size is 6,000 units, with a set-up cost of Rs. 750. For the second, the demand is 25 units per month, set-up cost is Rs. 30, production cost is Rs. 3 per item, carrying cost is 50 paise per unit per month, and shortage cost is Rs. 3 per item per month. The optimal number of batches and batch size must be determined for each scenario to minimize total costs.

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Indrani Dasgupta
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3K views1 page

Illustration 1: Compute The Economic Batch Quantity For A Company Using Batch Costing With The Following Information

The document provides information and instructions for calculating economic batch quantities and optimal batch sizes for three different production scenarios. For the first scenario, the annual demand is 24,000 units and the largest batch size is 6,000 units, with a set-up cost of Rs. 750. For the second, the demand is 25 units per month, set-up cost is Rs. 30, production cost is Rs. 3 per item, carrying cost is 50 paise per unit per month, and shortage cost is Rs. 3 per item per month. The optimal number of batches and batch size must be determined for each scenario to minimize total costs.

Uploaded by

Indrani Dasgupta
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd
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Illustration 1:

Compute the economic batch quantity for a company using batch costing with the following information:

Illustration 2:
The annual demand of a product is 24,000 units. It is produced in batches and the largest size of a single batch is 6,000
units. After each batch is complete, the set up cost is Rs. 750. The annual carrying cost is Rs. 2.25 per unit.
Assume average inventory as one-half of the number of units made in each batch. Selecting 4, 6, 8, 12 and 24 batches
per annum, determine annual costs of each and state the optimum number of batches to minimize the total costs.

 
Illustration 3:
The demand of an item is uniform at a rate of 25 units p.m. The set up cost is Rs. 30 each time a production is made.
The production cost is Rs. 3 per item and the inventory carrying cost is 50 paise per unit p.m. If the shortage cost is Rs.
3 per item p.m. determine how often to make a production run and of what size? Also calculate re-order level.

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