In the context of inventory costs, _____ can reflect backorders or service interruptions for external customers.
A) holding costs
B) stockout costs
C) ordering costs
D) setup costs

Question

Quizplus · Accepted Answer

Stockout costs are associated with the costs of running out of inventory and include lost sales and potential service interruptions for external customers. Holding costs relate to expenses associated with carrying inventory, such as storage and insurance costs. Ordering costs are those associated with placing an order, such as processing and transportation costs. Setup costs are associated with preparing equipment for production runs.

In the Context of Inventory Costs, _____ Can Reflect Backorders