Neco 2020 Commerce Question 38
Practice objective / multiple choice question 38 from the 2020 Neco Commerce examination.
A company has an annual demand of \(12{,}000\) units for a product. The ordering cost per order is \(\₦2{,}000\). The holding cost is \(25\%\) of the unit cost per year. The unit cost depends on the order quantity as follows: • up to \(2{,}000\) units - \(\₦150\) each; • from \(2{,}001\) to \(5{,}000\) units - \(\₦140\) each; • above \(5{,}000\) units - \(\₦130\) each. The warehouse can hold at most \(4{,}000\) units at any time. Determine the order quantity that minimises the total annual cost while respecting the warehouse capacity, and state the corresponding total annual cost (in naira, rounded to the nearest naira).
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About This Question
This is Neco 2020 Commerce Question 38. It is one of the objective questions from the 2020 Neco Commerce examination.
Difficulty level: Hard .
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