A customer has been ordering 5,000 special design metal columns at the rate of 1,000 per order during the past year. The production cost is `12 a unit–`8 for materials and labour and `4 for overheads...

A customer has been ordering 5,000 special design metal columns at the rate of 1,000 per order during the past year. The production cost is `12 a unit–`8 for materials and labour and `4 for overheads (fixed) cost. It costs `1,500 to set up for one run of 1,000 columns, and inventory carrying cost is 20 per cent. Since this customers may buy at least 5,000 columns this year, the company would like to avoid making five different production runs. Find the most economic production run.