Gce Model Questions Vol1 2018 Commerce Question 3
Practice objective / multiple choice question 3 from the 2018 Gce Model Questions Vol1 Commerce examination.
A retailer sells a product with an average weekly demand of 120 units. Weekly demand is normally distributed with a standard deviation of 30 units. The supplier's lead time is 10 days (≈1.43 weeks). The retailer wishes to maintain a 95 % service level (i.e., the probability of not stocking out during lead time). The unit cost of the product is ₦500 and the holding cost is 20 % of the unit cost per year. The ordering cost per order is ₦1 200. Calculate (a) the Economic Order Quantity (EOQ) and (b) the Re‑order Point (ROP) that the retailer should use. Round the EOQ to the nearest whole unit and the ROP to the nearest whole unit.
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About This Question
This is Gce Model Questions Vol1 2018 Commerce Question 3. It is one of the objective questions from the 2018 Gce Model Questions Vol1 Commerce examination.
Difficulty level: Medium .
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