Neco 2017 Commerce Question 47

Practice objective / multiple choice question 47 from the 2017 Neco Commerce examination.

Neco 2017 Commerce Objective / Multiple Choice Hard Difficulty
Question 47 NECO • 2017 • COMMERCE • objective

Demand for an item is constant at 500 units per month. The ordering cost is N2,000 per order. The unit cost is N150 and the holding cost is 10 % of the unit cost per year. Shortage (back‑ordering) cost is N50 per unit per year. Lead time is 2 months. Using the EOQ model with back‑ordering, determine (i) the optimal order quantity Q* (units, nearest whole unit), (ii) the maximum back‑order level B* (units, nearest whole unit), and (iii) the minimum total relevant cost per year (Naira, rounded to the nearest N).

Answer Options

A. Q* = 1,380 units; B* = 300 units; Minimum annual cost ≈ N16,800
B. Q* = 1,442 units; B* = 280 units; Minimum annual cost ≈ N16,650
Correct Answer C. Q* = 1,442 units; B* = 332 units; Minimum annual cost ≈ N16,650
D. Q* = 1,500 units; B* = 350 units; Minimum annual cost ≈ N16,400
Correct Answer
C
Correct Option:
Q* = 1,442 units; B* = 332 units; Minimum annual cost ≈ N16,650

About This Question

This is Neco 2017 Commerce Question 47. It is one of the objective questions from the 2017 Neco Commerce examination.

Difficulty level: Hard .

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