Gce Model Questions Vol1 2019 Commerce Question 28

A warehouse stores a single product. Annual demand is 12,000 units. The ordering cost is \(\text{₦}500\) per order and the holding cost is 20\% of the unit cost per year. The unit cost is \(\text{₦}80\). Each pallet holds 100 units and occupies 1.5 m²; the warehouse has 90 m² available for this product. Lead time is 2 weeks and the weekly demand variance is 25 units². The company requires a 95\% service level, which corresponds to a safety stock of 1.65 standard deviations of demand during lead time. Determine the optimal order quantity that satisfies the space constraint and service‑level requirement, and compute the resulting total annual cost (ordering + holding + purchase). Give the order quantity (units) and the total annual cost (₦, rounded to the nearest naira).