Question

1) A contractor undertakes to supply dlesel engines to a truck manufacturer at a rate of 25 per day. He
finds that the cost of holding a completed engine in stock is Rs. 16 per month, and there is a clause In
the contract penalizing him Rs. 10 per engine per day late for missing the scheduled delivery date. His
Production process is such that each month he starts a batch of engines through the shops and all
these engines are available for delivery any time after the end of the month. What should his inventory
level be at the beginning of each month?​

Answer 1

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