Machin cost :Batch size to change from 500 to 400
As my understanding the solution should be (26-4)*400/500.
But in answer sheet the solution is (26-4)*500/400.
can u plz xplain sir ?
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Q1.June 2012 .
8y ago#1For 80,000 units, at the current batch size of 500 units, they would need to make 80,000/500 = 160 batches.
With the new batch size of 400 units, they would need to make 80,000/400 = 200 batches.
So a smaller batch size, means more batches and more cost.
The cost increases to (26-4) x 200/160 = 27.5 (which is a different way of arriving at the same answer as the examiner) :-)
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