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A television manufacturing company produces its own speakers, which are used in the production of its television sets. The television sets are assembled on a continuous production line at rate of 8,000 per month. The company is interested in determining when and how much to procure, given the following information:
(I) Each time a batch is produced, a set-up cost of Rs.12,000 is incurred.
(II) The cost of keeping a speaker in stock is Rs. 0.30 per month.
(III) The production cost of a single speaker is Rs.10.00 and can be assumed to be a unit cost.
(IV) Shortage of a speaker, (if there exists) costs Rs. 1.10 per month.
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