Waec Model Questions Vol1 2018 Commerce Question 49

Practice objective / multiple choice question 49 from the 2018 Waec Model Questions Vol1 Commerce examination.

Waec Model Questions Vol1 2018 Commerce Objective / Multiple Choice Hard Difficulty
Question 49 WAEC_MODEL_QUESTIONS_VOL1 • 2018 • COMMERCE • objective

A wholesale firm stores a single product in a warehouse. Annual demand is 24,000 units. The ordering (including transport) cost is ₦5,000 per order. Holding cost consists of a basic storage charge of ₦2 per unit per year and an insurance charge equal to 0.5% of the unit value per year. The unit cost is ₦1,200. The warehouse offers a volume discount: if the average inventory exceeds 1,500 units, the basic storage charge per unit per year is reduced by 20%. Determine the order quantity that minimises the total annual cost, taking the possible discount into account, and state the minimum total annual cost (in Naira).

Answer Options

A. Order quantity = 6,000 units; Minimum total cost = ₦29,200,000
B. Order quantity = 5,800 units; Minimum total cost = ₦28,950,000
C. Order quantity = 5,400 units; Minimum total cost = ₦28,500,000
Correct Answer D. Order quantity = 5,621 units; Minimum total cost = ₦28,842,708
Correct Answer
D
Correct Option:
Order quantity = 5,621 units; Minimum total cost = ₦28,842,708

About This Question

This is Waec Model Questions Vol1 2018 Commerce Question 49. It is one of the objective questions from the 2018 Waec Model Questions Vol1 Commerce examination.

Difficulty level: Hard .

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