Asked by Nurul Ainaa on Jul 01, 2024
Verified
All else the same, ________ costs are greatest when the firm holds a small quantity of inventory, and ___________ costs are greatest when there is a large quantity of inventory on hand.
A) Carrying; interest.
B) Opportunity; restocking.
C) Restocking; carrying.
D) Carrying; restocking.
E) Interest; carrying.
Restocking Costs
Expenses associated with replenishing inventory or stock levels in a business, including purchasing, shipping, and handling costs.
Carrying Costs
The aggregate amount spent on inventory upkeep, which covers costs related to storage, insurance premiums, and tax payments.
Opportunity Costs
The cost of an alternative that must be forgone in order to pursue a certain action. Put another way, the benefits you could have received by taking an alternative action.
- Understand the components involved in carrying costs and identify the differences among various cost types.
- Comprehend how decisions regarding inventory management influence an organization's operational productivity and cost implications.
Verified Answer
Learning Objectives
- Understand the components involved in carrying costs and identify the differences among various cost types.
- Comprehend how decisions regarding inventory management influence an organization's operational productivity and cost implications.
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