Waec Model Questions Vol1 2020 Commerce Question 15
Practice objective / multiple choice question 15 from the 2020 Waec Model Questions Vol1 Commerce examination.
A company stores a product in a warehouse. Annual demand for the product is 12,000 units. The ordering cost per order is ₦5,000. Holding cost is 25% of the unit cost per year, and the unit cost is ₦800. The warehouse can hold at most 2,500 units at any time. Because demand varies, the company wants to keep a safety stock equal to 10% of the order quantity. Determine the optimal order quantity that minimises the total annual cost (ordering + holding + purchase) while respecting the warehouse capacity, and state the resulting total annual cost (rounded to the nearest naira).
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About This Question
This is Waec Model Questions Vol1 2020 Commerce Question 15. It is one of the objective questions from the 2020 Waec Model Questions Vol1 Commerce examination.
Difficulty level: Hard .
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