Neco 2023 Commerce Question 27
Practice objective / multiple choice question 27 from the 2023 Neco Commerce examination.
A warehouse handles a single product with an annual demand of 12 000 units. The ordering cost per order is (2500) Naira and the holding cost is 20 % of the unit cost per year. The unit cost is (150) Naira. Policy A uses the Economic Order Quantity (EOQ) with no safety stock and a lead time of 5 days (300 working days per year). Policy B uses a lead time of 8 days and keeps a safety stock equal to the demand during lead time plus an additional 10 % buffer. Assuming the total annual cost (ordering + holding) under Policy B is minimized, what order quantity should be used under Policy B? Give your answer to the nearest whole unit.
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About This Question
This is Neco 2023 Commerce Question 27. It is one of the objective questions from the 2023 Neco Commerce examination.
Difficulty level: Hard .
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