A Company has the option to procure a particular material from two sources: Source I assures that defectives will not be more than 2 per cent of supplied quantity. Source II does not give any...

A Company has the option to procure a particular material from two sources: Source I assures that defectives will not be more than 2 per cent of supplied quantity. Source II does not give any assurance, but on the basis of past experience of supplies received from it, it is observed that defective percentage is 2.8 per cent. The material is supplied in lots of 1,000 units. Source II supplies the lot at a price, which is lower by `100 as compared to source 1. The defective units of material can be rectified for use at a cost of `5 per unit.

You are required to find out which of the two sources is more economical.