Neco 2023 Commerce Question 8
Practice objective / multiple choice question 8 from the 2023 Neco Commerce examination.
A warehouse faces an annual demand of 12,000 units for a product. The ordering cost is \(\text{₦}2,500\) per order and the holding cost is 20\% of the unit cost per year. Each unit costs \(\text{₦}150\). Lead time is 10 days and daily demand is uniform. The manager requires a 95\% service level; demand during lead time is normally distributed with a standard deviation equal to 15\% of the mean lead‑time demand. Determine (i) the economic order quantity (EOQ) and (ii) the reorder point (ROP) that includes safety stock. Round the EOQ to the nearest whole unit and the ROP up to the nearest whole unit.
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About This Question
This is Neco 2023 Commerce Question 8. It is one of the objective questions from the 2023 Neco Commerce examination.
Difficulty level: Hard .
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