CAT 1998 — QA Question 4
âââââââDirection: Answer the questions based on the following information.
Production pattern for number of units (in cubic feet) per day.
For a truck that can carry 2,000 cubic ft, hiring cost per day is Rs. 1,000. Storing cost per cubic feet is Rs. 5 per day.
If the storage cost is reduced to Re 0.80 per cubic feet per day, then on which day(s), should the truck be hired?
Answer & solution
- A
4th
7th
- C
4th and 7th
- D
None of these
If the storage cost is reduced to Re 0.8 per cubic feet, then the cost pattern is as given in the following table.
âââââââ
** In spite of the fact that storing is cheaper than hiring truck on the last day, we have to do with the latter option because everything that is manufactured has to be sent to the market.
Hence, the most cost-effective scheme would be sending the entire production on the 7th day.