What costs should a manager consider when setting order points?
A)carrying costs and purchase costs
B)stockout costs and purchase costs
C)ordering costs and stockout costs
D)carrying costs and stockout costs

Question

What costs should a manager consider when setting order points?​
A)​carrying costs and purchase costs
B)​stockout costs and purchase costs
C)​ordering costs and stockout costs
D)​carrying costs and stockout costs

Quizplus · Accepted Answer

When setting order points, a manager should consider the costs associated with carrying inventory (carrying costs) and the costs associated with running out of inventory (stockout costs). Ordering costs may also be considered, but they are not as relevant to determining the appropriate order point. Purchase costs are not as relevant since they are typically predetermined by suppliers and may not be variable based on order point decisions.

What Costs Should a Manager Consider When Setting Order Points?​

What Costs Should a Manager Consider When Setting Order Points?