Neco Model Questions Vol1 2025 Commerce Question 28

Practice objective / multiple choice question 28 from the 2025 Neco Model Questions Vol1 Commerce examination.

Neco Model Questions Vol1 2025 Commerce Objective / Multiple Choice Hard Difficulty
Question 28 NECO_MODEL_QUESTIONS_VOL1 • 2025 • COMMERCE • objective

A warehouse handles a product with an annual demand of 24,000 units. The ordering cost per order is \(₦15,000\) and the unit cost is \(₦800\). Holding cost is \(25\%\) of the unit cost per year. Weekly demand follows a normal distribution with mean 500 units and standard deviation 80 units. Lead time is 2 weeks and the manager wants a 95\% service level (z = 1.65). (a) Determine the Economic Order Quantity (EOQ). (b) Determine the reorder point, including safety stock.

Answer Options

A. EOQ ≈ 1,800 units; Reorder point ≈ 1,250 units
Correct Answer B. EOQ ≈ 1,897 units; Reorder point ≈ 1,187 units
C. EOQ ≈ 2,000 units; Reorder point ≈ 1,100 units
D. EOQ ≈ 1,950 units; Reorder point ≈ 1,300 units
Correct Answer
B
Correct Option:
EOQ ≈ 1,897 units; Reorder point ≈ 1,187 units

About This Question

This is Neco Model Questions Vol1 2025 Commerce Question 28. It is one of the objective questions from the 2025 Neco Model Questions Vol1 Commerce examination.

Difficulty level: Hard .

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