The two major costs associated with inventory are
A) ordering costs and setup costs.
B) setup costs and stockout costs.
C) stockout costs and carrying costs.
D) ordering costs and carrying costs.
E) None of these.

Question

Quizplus · Accepted Answer

The two major costs associated with inventory are ordering costs, which include the cost of placing an order and receiving goods, and carrying costs, which are the expenses incurred while holding inventory. Option A is incorrect because setup costs are not directly related to inventory management. Option B is incorrect because stockout costs are a result of not having inventory, rather than having it. Option C is incorrect because stockout costs are already mentioned and carrying costs are a major cost associated with inventory, not setup costs.

The Two Major Costs Associated with Inventory Are