Waec Model Questions Vol1 2025 Commerce Question 47

A warehouse manager faces an annual demand of 12,000 units for a product that costs ₦200 each. The ordering cost per order is ₦500 and the holding cost is 20% of the unit cost per year. Lead time is 10 days and demand is uniform throughout the year (365 days). The manager wants a 95% service level, assuming demand during lead time follows a normal distribution with standard deviation equal to the square‑root of the mean demand during lead time. Compute (a) the Economic Order Quantity (EOQ), (b) the safety stock required, (c) the total annual cost (including purchase, ordering and holding costs) and (d) the warehouse space needed if each unit occupies 0.025 m³ and the safety stock must be stored together with the order quantity.