The inventory cost that can include lost sales, cost of expediting, and cost of interrupted production is called
A) ordering cost.
B) carrying cost.
C) stockout cost.
D) setup cost.
E) storing cost.

Question

Quizplus · Accepted Answer

The inventory cost that can include lost sales, cost of expediting, and cost of interrupted production is called stockout cost. This cost occurs when demand exceeds supply and the company has to either expedite the production or lose sales, both of which have additional costs associated with them. Ordering cost is the cost associated with placing an order for inventory, carrying cost is the cost of holding inventory, setup cost is the cost of preparing a machine or production line for a new batch of products, and storing cost is the cost of physically storing inventory.

The Inventory Cost That Can Include Lost Sales, Cost of Expediting