Neco 2018 Commerce Question 50
Practice objective / multiple choice question 50 from the 2018 Neco Commerce examination.
A retailer has an annual demand of 12,000 units for a product. The ordering cost per order is \(\text{₦}5,000\), the unit cost is \(\text{₦}800\) and the holding cost is 20% of the unit cost per year. The lead time is 10 days (assume 365 days per year). (a) Determine the Economic Order Quantity (EOQ) in units (round to the nearest whole unit). (b) Assuming the retailer keeps a safety stock equal to the demand during lead time, compute the total annual cost (including purchase cost, ordering cost, and holding cost for both average inventory and safety stock). Give the total cost in naira rounded to the nearest naira.
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About This Question
This is Neco 2018 Commerce Question 50. It is one of the objective questions from the 2018 Neco Commerce examination.
Difficulty level: Hard .
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