A supplier undertakes to supply 2000 pieces of a particular item at Rs. 25 per piece. According to his estimates, even if 5% fail to pass the quality tests, then he will make a profit of 25%. However, as it turned out. 50% of the items were rejected. what is the loss to the supplier?
Solution: Total cost incurred = Rs. [100/125 * 25* (95% of 2000)]
= Rs. (100/125 * 25 *1900) = Rs. 38000.
Loss of the supplier = Rs. [38000-(25*1000)] = Rs. 13,000.
how is come loss of supplier..??
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