Pintu Ltd. operates in beverages industry where it manufactures soft-drink in three sizes of Large (3 litres), Medium (1.5 litres) and Small (600…

Workings: Maximum number of bottles that can be processed in a batch: 5,000 ltrs / Bottle volume Qty (ltr) Max bottles Qty (ltr) Max bottles Qty (ltr) Max bottles Large 3 1,666 Medium 1.5 3,333 Small 0.6 8,333 *For simplicity of calculation small fractions has been ignored. Number of batches to be run: Large Medium Small Total A Demand 3,00,000 7,50,000 20,00,000 B Bottles per batch (Refer WN-1) 1,666 3,333 8,333 C No. of batches [A÷B] 180 225 240 645 *For simplicity of calculation small fractions has been ignored. Quantity of Material-W and Material C required to meet demand: Particulars Large Medium Small Total A Demand (bottle) 3,00,000 7,50,000 20,00,000 B Qty per bottle (Litre) 3 1.5 0.6 C Output (Litre) [A×B] 9,00,000 11,25,000 12,00,000 32,25,000 D Material-W per litre of output (Litre) 14 14 14 E Material-W required (Litre) [C×D] 1,26,00,000 1,57,50,000 1,68,00,000 4,51,50,000 F Material-C required per litre of output (ml) 25 25 25 G Material-C required (Litre) [(C×F) ÷ 1000] 22,500 28,125 30,000 80,625 No. of Man-shift required: Large Medium Small Total A No. of batches 180 225 240 645 B Hours required per batch (Hours) 2 2 2 C Total hours required (Hours) [A×B] 360 450 480 1,290 D No. of shifts required [C÷8] 45 57 60 162 E Total manshift [D×20 workers] 900 1,140 1,200 3,240 Power consumption in Kwh Large Medium Small Total For processing A No. of batches 180 225 240 645 B Hours required per batch (Hours) 1.75 1.75 1.75 21.75 C Total hours required (Hours) [A×B] 315 393.75 420 1,128.75 D Power consumption per hour 90 90 90 90 E Power consumption in Kwh [C×D] 28,350 35,437.5 37,800 1,01,587.5 F Per batch consumption (Kwh) [E÷A] 157.5 157.5 157.5 157.5 For set-up G Hours required per batch (Hours) 0.25 0.25 0.25 0.25 H Total hours required (Hours) [A×G] 45 56.25 60 161.25 I Power consumption per hour [20% × 90] 18 18 18 18 J Power consumption in Kwh [H×I] 810 1,012.5 1,080 2,902.5 K Per batch consumption (Kwh) [J÷A] 4.5 4.5 4.5 4.5 Calculation of Profit/ loss per batch: Particulars Large Medium Small Total A Demand (bottle) 3,00,000 7,50,000 20,00,000 30,50,000 B Price per bottle (₹) 150 90 50 C Sales value (₹) [A×B] 4,50,00,000 6,75,00,000 10,00,00,000 21,25,00,000 Direct Material cost: E Material-W (₹) [Qty in WN - 3 × 0.50] 63,00,000 78,75,000 84,00,000 2,25,75,000 F Material-C (₹) [Qty in WN-3 × 1,000] 2,25,00,000 2,81,25,000 3,00,00,000 8,06,25,000 G [E+F] 2,88,00,000 3,60,00,000 3,84,00,000 10,32,00,000 H Direct Wages (₹) [Man-shift in WN-4 × 880] 7,92,000 10,03,200 10,56,000 28,51,200 I Packing cost (₹) [A × 3] 9,00,000 22,50,000 60,00,000 91,50,000 Power cost (₹) J For processing (₹) [WN-5 × 7] 1,98,450 2,48,062.5 2,64,600 7,11,112.5 K For set-up time (₹) [WN-5 × ₹7] 5,670 7,087.5 7,560 20,317.5 L [J+K] 2,04,120 2,55,150 2,72,160 7,31,430 M Other variable cost (₹) [No. of batch in WN - 2 x 30,000] 54,00,000 67,50,000 72,00,000 1,93,50,000 N Total Variable cost per batch [G+H+I+L+M] 3,60,96,120 4,62,58,350 5,29,28,160 13,52,82,630 O Profit/ loss before fixed cost [C-N] 89,03,880 2,12,41,650 4,70,71,840 7,72,17,370 P Fixed Cost 4,90,00,000 Q Total Profit [O-P] 2,82,17,370 Computation of Economic Batch Quantity (EBQ): EBQ = √(2 x D x S / C) D = Annual Demand for the Product = Refer A below S = Set-up cost per batch = Refer D below C = Carrying cost per unit per annum = Refer E below Particulars Large Medium Small A Annual Demand (bottle) 3,00,000 7,50,000 20,00,000 Set-up Cost: B Power cost for set-up time (₹) [Consumption per batch in WN-5 × ₹7] 31.50 31.50 31.50 C Other variable cost (*) 30,000 30,000 30,000 D Total Set-up cost [B+C] 30,031.50 30,031.50 30,031.50 E Holding cost: 1.00 1.00 1.00 F EBQ (Bottle) 1,34,234 2,12,243 3,46,592 * Other variable cost is assumed to be part of set-up cost.