Gce Model Questions Vol1 2025 Commerce Question 27

A warehouse handles a single product with an annual demand of 12,000 units. The ordering cost per order is $150 and the holding cost is 20% of the unit cost per year. Each unit costs $40. The warehouse has a total usable floor area of 2,000 m², and each unit occupies 0.15 m². In addition, the warehouse incurs a space cost of $5 per m² per year. (a) Determine the Economic Order Quantity (EOQ) that minimizes total relevant cost. (b) Verify whether the EOQ fits within the available floor area. (c) If it does, compute the total annual cost including purchase cost, ordering cost, holding cost and space cost. Give the EOQ (rounded to the nearest whole unit) and the total annual cost (rounded to the nearest dollar).