Gce Model Questions Vol1 2017 Commerce Question 19

Practice objective / multiple choice question 19 from the 2017 Gce Model Questions Vol1 Commerce examination.

Gce Model Questions Vol1 2017 Commerce Objective / Multiple Choice Hard Difficulty
Question 19 GCE_MODEL_QUESTIONS_VOL1 • 2017 • COMMERCE • objective

A warehouse stocks a single product with an annual demand of 12,000 units. The ordering cost per order is \(\text{₦}2{,}500\) and the holding cost is 20 % of the unit cost per year. The unit cost is \(\text{₦}80\). The supplier's lead time is 10 days. Demand during lead time is normally distributed with a mean equal to the average daily demand and a standard deviation equal to 10 % of the mean daily demand. To maintain a 95 % service level, determine (a) the economic order quantity (EOQ) and (b) the reorder point (including safety stock).

Answer Options

Correct Answer A. EOQ ≈ 1,937 units; Reorder point ≈ 346 units
B. EOQ ≈ 1,900 units; Reorder point ≈ 360 units
C. EOQ ≈ 1,850 units; Reorder point ≈ 320 units
D. EOQ ≈ 2,050 units; Reorder point ≈ 380 units
Correct Answer
A
Correct Option:
EOQ ≈ 1,937 units; Reorder point ≈ 346 units

About This Question

This is Gce Model Questions Vol1 2017 Commerce Question 19. It is one of the objective questions from the 2017 Gce Model Questions Vol1 Commerce examination.

Difficulty level: Hard .

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