Answer :

Correct answer is : 5.32

Given, for case (i)

Q = 1000, C = Rs. 10, r = 10% and Cost of downtime = 200/hr, Change over time = 2 hrs

Then,

$T_{c1}=1000\times 10+\frac{1000}{2}\times 10\times \frac{10}{100}+200\times 2=Rs.10900$

Case (ii)

800 units are ordered from vendor X then total cost from vendor X, only the units will change other conditions will remain the same as the vendor is the same

$T_{cx}=800\times 10+\frac{800}{2}\times 10\times \frac{10}{100}+200\times 2=Rs.8800$

For vendor Y

Q = 200, C = Rs. 5, r = 100% and Cost of downtime = 200/hr, Change over time = 6 minutes

$T_{cy}=200\times 5+\frac{200}{2}\times 5\times \frac{100}{100}+200\times \frac{1}{10}=Rs.1520$

Therefore $T_{c2}=8800+1520=Rs.10320$

Now the percentage reduction in cost in case (ii)

$\mathrm{\%}reduction=\frac{T_{c1}-T_{c2}}{T_{c1}}\times 100=\frac{10900-10320}{10900}\times 100=5.321\mathrm{\%}$

Since %reduction in EOQ model is more compared to the single order therefore the correct answer will be 8.209%.