Gce Model Questions Vol1 2024 Commerce Question 20

A retailer stores a product in a warehouse. Annual demand is 12,000 units, uniformly distributed throughout the year. The ordering cost is \(\text{₦}2{,}000\) per order. Holding cost is 25% of the unit cost per year; the unit cost is \(\text{₦}150\). Lead time is 10 days. The retailer wants a 95% service level, and demand during lead time follows a normal distribution with mean equal to the average demand during lead time and standard deviation equal to 10% of that mean. Determine:\n\n(a) the Economic Order Quantity (EOQ);\n(b) the safety stock required for the 95% service level;\n(c) the reorder point (ROP) in units;\n(d) the total annual inventory cost (ordering + holding + safety‑stock holding cost).