Neco 2025 Commerce Question 1

A retailer manages a single product. Annual demand is \(12{,}000\) units, ordering cost per order is \(\text{₦}500\), and the holding cost is \(\text{₦}2\) per unit per year. Lead time is \(10\) days. Daily demand is assumed constant, but demand during lead time varies with a standard deviation of \(5\) units per day. For a 95\% service level, use a Z‑value of \(1.65\). Each unit occupies \(0.02\) m\(^3\) of warehouse space and the warehouse can store at most \(800\) units (space constraint). The holding cost of \(\text{₦}2\) already includes the cost of space. Determine the order quantity that minimises total relevant cost while respecting the storage capacity, and state the reorder point (in units).