Inventory holding costs typically include:
A)clerical costs of purchase-order preparation.
B)costs of deterioration,theft,or spoilage.
C)costs associated with lost sales to customers.
D)forgone interest on money tied up in inventory.
E)items "B" And "D" abovE.

Question

Quizplus · Accepted Answer

Inventory holding costs typically include the costs of deterioration, theft, or spoilage (B) and forgone interest on money tied up in inventory (D). The other options, such as clerical costs of purchase-order preparation (A) and costs associated with lost sales to customers (C), can be considered as ordering and shortage costs. Therefore, only option E (items B and D above) contains the correct components of holding costs.

Inventory Holding Costs Typically Include