As the service level increases,
A) carrying cost increases at an increasing rate.
B) carrying cost increases at a decreasing rate.
C) carrying cost decreases at a decreasing rate.
D) carrying cost decreases at an increasing rate.
E) None of the above

Question

Quizplus · Accepted Answer

As the service level increases, more inventory is held to prevent stockouts, leading to higher carrying costs, which increase at an increasing rate due to the additional costs associated with holding more inventory.

As the Service Level Increases