Neco Model Questions Vol1 2020 Commerce Question 50

A warehouse stores product X on pallets. Each pallet holds 120 units. The annual demand for product X is 24,000 units. The fixed storage cost per pallet per year is \(\text{₦}2{,}000\) for the first 100 pallets and \(\text{₦}1{,}800\) for each additional pallet beyond 100. The handling cost is \(\text{₦}5\) per unit per year. The warehouse can accommodate at most 150 pallets.\n\n(a) Calculate the total annual storage cost for the number of pallets required to meet the demand.\n(b) Determine the total annual handling cost.\n(c) State whether the existing capacity is sufficient. If not, indicate the minimum number of additional pallets required and the extra annual storage cost incurred by those additional pallets.