Guys, I have a doubt in question 31 of chapter 1 of AMA. The concept is Just in Time. I have attached the question and answer below.
In the comparison between current policy and JIT, 'opportunity cost' (line no. 3) and 'other carrying cost' (line no. 4) are taken. For both of these, the amount is calculated on 1000 packages or 100 packages while the requirement is 13000 packages in a year. Can someone please explain why 13000 is not taken ?
Also, the calculation goes like this: 1/2 * 1000 packages*140*15%. Can someone please explain why it's multiplied by 1/2 ?
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CAclubindia
