Subject COST, Topic MATERIAL problem?

Vikas Kumar Gupta (Student IPCC) (408 Points)

05 December 2008  

 

 

A Ltd. Is committed to supply 24,000 bearings per annum to B Ltd. on steady basis. It is estimated that it costs 10 paise as inventory holding cost per bearing per month and that the set-up cost per run of bearing manufacture is Rs. 324.
Find out the minimum inventory cost per annum?
Solution
Minimum inventory cost per annum
= Total production run cost + Totel carrying cost per annum
= 24,000 bearings/3,600 bearings  x Rs. 324 + ½  x  3,600 bearings***  X  0.10 P x 12 months
= Rs. 2,160 + Rs. 2.160 = Rs.4,320
 
***SO, FRIENDS HEARE MY QUESTION IS , I AM NOT UNDESATANDING  THAT WHY   ½  x(IS MULTIPLYED BY) 3600 BEARINGS  ?
Please explain me my dear friends and respected seniors why 1/2 ?