Neco Model Questions Vol1 2019 Commerce Question 48
Practice objective / multiple choice question 48 from the 2019 Neco Model Questions Vol1 Commerce examination.
A warehouse stocks an item with an annual demand of 12,000 units, assumed to be used at a constant rate. The lead time for replenishment is normally distributed with a mean of 5 days and a standard deviation of 2 days. The manager wishes to maintain a 95 % service level (i.e., probability of no stock‑out during lead time). The holding cost is \(\text{₦}2\) per unit per year and the ordering cost is \(\text{₦}500\) per order. Determine (a) the economic order quantity (EOQ) and (b) the reorder point (R) that should be set.
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About This Question
This is Neco Model Questions Vol1 2019 Commerce Question 48. It is one of the objective questions from the 2019 Neco Model Questions Vol1 Commerce examination.
Difficulty level: Hard .
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