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1) ABC Ltd. creates the product that has a monthly demand of= 4,000 units. The product needs a component X that is purchased at= Rs.20. For every finished product one unit of component is needed. Ordering cost is= Rs.120 per order and holding cost is 10 per cent per annum.
You are needed to compute:

(i) Economic order quantity

(ii) If minimum lot size to be supplied is= 4, 000 units, what is the additional cost, the company has to acquire?

(iii) Determine the minimum carrying cost, company has to acquire?

2) Brand managers make out that increasing promotional budgets finally result in diminishing returns. 1st one million dollars naturally results in= 26% increase in awareness, whereas the 2nd million results in adding another 18% and third million in= 5% increase. Andrews’s product Awe presently has the awareness level of 80%. Whereas the significant product for Andrews, Awe’s promotion budget, will be decreased to one million dollars for upcoming year. Supposing that Awe loses one-third of its awareness each year, what will Awe’s awareness level be next year?

i) 79%
ii) 58%
iii) 74%
iv) 53%

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