Neco Model Questions Vol1 2023 Commerce Question 33

A warehouse stores two products, A and B. Product A has an annual demand of \(12{,}000\) units, unit volume \(0.025\) m³, ordering cost \(\text{₦}500\) per order and a holding cost equal to \(20\%\) of its unit cost (unit cost = \(\text{₦}200\)). Product B has an annual demand of \(8{,}000\) units, unit volume \(0.04\) m³, ordering cost \(\text{₦}400\) per order and a holding cost equal to \(25\%\) of its unit cost (unit cost = \(\text{₦}300\)). The total usable warehouse volume is \(10\) m³.\n\n(a) Calculate the Economic Order Quantity (EOQ) for each product.\n(b) Using the EOQ values, compute the average inventory volume for each product and verify whether the combined average volume fits within the \(10\) m³ capacity.\n(c) If the combined average volume exceeds the capacity, keep product A at its EOQ and determine the maximum feasible order quantity for product B that satisfies the volume constraint.