Which one of the following inventory-related costs is considered a shortage cost?
A)storage costs
B)insurance cost
C)cost of safety reserves
D)obsolescence cost
E)opportunity cost of capital used for inventory purchases

Question

Quizplus · Accepted Answer

Shortage cost refers to the cost of losing sales or customer loyalty due to inadequate or out-of-stock inventory. The cost of safety reserves falls under this category as it is the cost of holding inventory to ensure that enough inventory is available to meet demand and prevent stockouts.

Which One of the Following Inventory-Related Costs Is Considered a Shortage