Neco 2022 Commerce Question 1

Practice objective / multiple choice question 1 from the 2022 Neco Commerce examination.

Neco 2022 Commerce Objective / Multiple Choice Hard Difficulty
Question 1 NECO • 2022 • COMMERCE • objective

A warehouse manager faces an annual demand of \(D = 12{,}000\) units for a product. The ordering cost per order is \(S = \text{₦}500\). The holding cost is 25\% of the unit purchase price per year. The supplier offers the following price schedule: 1\u2013499 units: \(\text{₦}150\) each; 500\u2013999 units: \(\text{₦}140\) each; 1{,}000 units or more: \(\text{₦}130\) each. Assuming the Economic Order Quantity (EOQ) model applies, determine the order quantity that minimises the total annual cost and state that minimum total cost.

Answer Options

A. Order quantity = 1,200 units; Minimum total annual cost = ₦1,590,500
Correct Answer B. Order quantity = 1,000 units; Minimum total annual cost = ₦1,582,250
C. Order quantity = 1,500 units; Minimum total annual cost = ₦1,605,750
D. Order quantity = 500 units; Minimum total annual cost = ₦1,610,000
Correct Answer
B
Correct Option:
Order quantity = 1,000 units; Minimum total annual cost = ₦1,582,250

About This Question

This is Neco 2022 Commerce Question 1. It is one of the objective questions from the 2022 Neco Commerce examination.

Difficulty level: Hard .

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