Neco Model Questions Vol1 2025 Commerce Question 23

Practice objective / multiple choice question 23 from the 2025 Neco Model Questions Vol1 Commerce examination.

Neco Model Questions Vol1 2025 Commerce Objective / Multiple Choice Medium Difficulty
Question 23 NECO_MODEL_QUESTIONS_VOL1 • 2025 • COMMERCE • objective

A retailer faces an annual demand of 12,000 units for a product that costs \(\N{800}\) per unit. The ordering cost per order is \(\N{5,000}\) and the holding cost is 20% of the unit cost per year. The retailer wishes to keep a safety stock equal to 10% of the Economic Order Quantity (EOQ). Determine the EOQ and the total annual cost (ordering + holding + purchase) taking the safety stock into account.

Answer Options

A. EOQ \(\approx\N{1,000}\) units; total annual cost \(\approx\N{9,800,000}\)
B. EOQ \(\approx\N{950}\) units; total annual cost \(\approx\N{10,100,000}\)
Correct Answer C. EOQ \(\approx\N{866}\) units; total annual cost \(\approx\N{9,752,480}\)
D. EOQ \(\approx\N{800}\) units; total annual cost \(\approx\N{9,200,000}\)
Correct Answer
C
Correct Option:
EOQ \(\approx\N{866}\) units; total annual cost \(\approx\N{9,752,480}\)

About This Question

This is Neco Model Questions Vol1 2025 Commerce Question 23. It is one of the objective questions from the 2025 Neco Model Questions Vol1 Commerce examination.

Difficulty level: Medium .

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