Neco 2024 Commerce Question 40
Practice objective / multiple choice question 40 from the 2024 Neco Commerce examination.
A retailer faces an annual demand of 12,000 units for a product. The ordering cost is \(\text{₦}2,000\) per order. Holding cost is 25% of the unit cost per year, and the shortage (back‑order) cost is \(\text{₦}50\) per unit per year. The unit cost depends on the order quantity as follows: up to 500 units the cost is \(\text{₦}150\) each; for 501-1,500 units the cost is \(\text{₦}140\) each; for orders above 1,500 units the cost is \(\text{₦}130\) each. Assuming back‑orders are allowed, determine the order quantity that minimises the total annual cost and state the minimum total cost (rounded to the nearest hundred naira).
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About This Question
This is Neco 2024 Commerce Question 40. It is one of the objective questions from the 2024 Neco Commerce examination.
Difficulty level: Hard .
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