Gce Model Questions Vol1 2021 Commerce Question 32

Practice objective / multiple choice question 32 from the 2021 Gce Model Questions Vol1 Commerce examination.

Gce Model Questions Vol1 2021 Commerce Objective / Multiple Choice Hard Difficulty
Question 32 GCE_MODEL_QUESTIONS_VOL1 • 2021 • COMMERCE • objective

A warehouse stocks a product with an average daily demand of \(120\) units and a daily demand standard deviation of \(30\) units. Lead time is \(5\) days with a lead‑time standard deviation of \(1\) day. The firm wants a 95 % service level (z‑value \(1.645\)). Holding cost is 20 % of the unit cost (unit cost \(\text{₦}500\)). Annual demand is \(30{,}000\) units, ordering cost per order is \(\text{₦}2{,}000\).\n\nCalculate: (a) the safety stock, (b) the reorder point, (c) the Economic Order Quantity (EOQ), and (d) the total annual cost (ordering + holding) using the EOQ.

Answer Options

A. Safety stock: 190 units; Reorder point: 790 units; EOQ: 1,020 units; Total annual cost: ₦128,300
Correct Answer B. Safety stock: 226 units; Reorder point: 826 units; EOQ: 1,095 units; Total annual cost: ₦132,145
C. Safety stock: 240 units; Reorder point: 840 units; EOQ: 1,150 units; Total annual cost: ₦135,500
D. Safety stock: 210 units; Reorder point: 810 units; EOQ: 1,080 units; Total annual cost: ₦130,800
Correct Answer
B
Correct Option:
Safety stock: 226 units; Reorder point: 826 units; EOQ: 1,095 units; Total annual cost: ₦132,145

About This Question

This is Gce Model Questions Vol1 2021 Commerce Question 32. It is one of the objective questions from the 2021 Gce Model Questions Vol1 Commerce examination.

Difficulty level: Hard .

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