Neco 2022 Commerce Question 14

Practice objective / multiple choice question 14 from the 2022 Neco Commerce examination.

Neco 2022 Commerce Objective / Multiple Choice Hard Difficulty
Question 14 NECO • 2022 • COMMERCE • objective

A retailer faces an annual demand of 12,000 units for a product. The ordering cost is ₦5,000 per order. The unit cost is ₦200 and the holding cost is 2\% of the unit cost per month. The warehouse can hold at most 1,200 units at any time. (a) Compute the Economic Order Quantity (EOQ). (b) If the EOQ exceeds the warehouse capacity, determine the feasible order quantity that minimises the total relevant cost and state that minimum cost.

Answer Options

Correct Answer A. EOQ ≈ 1,581 units; feasible order quantity = 1,200 units; minimum total relevant cost = ₦78,800
B. EOQ ≈ 1,800 units; feasible order quantity = 1,200 units; minimum total relevant cost = ₦79,500
C. EOQ ≈ 1,400 units; feasible order quantity = 1,200 units; minimum total relevant cost = ₦80,500
D. EOQ ≈ 1,581 units; feasible order quantity = 1,000 units; minimum total relevant cost = ₦79,200
Correct Answer
A
Correct Option:
EOQ ≈ 1,581 units; feasible order quantity = 1,200 units; minimum total relevant cost = ₦78,800

About This Question

This is Neco 2022 Commerce Question 14. It is one of the objective questions from the 2022 Neco Commerce examination.

Difficulty level: Hard .

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