Question

    Monthly purchases = ₹20 lakh, lead time = 2 months.

    What is the LC amount required for an Inland Letter of Credit (LC)?
    A ₹10 lakh Correct Answer Incorrect Answer
    B ₹20 lakh Correct Answer Incorrect Answer
    C ₹30 lakh Correct Answer Incorrect Answer
    D ₹40 lakh Correct Answer Incorrect Answer
    E ₹50 lakh Correct Answer Incorrect Answer

    Solution

    LC Amount = Monthly Purchases × Lead Time = ₹20 lakh × 2 = ₹40 lakh This ensures that the business has enough LC limit to cover purchases over the lead time duration (transit or supply gap).

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