Which of the following is classified as an inventory shortage cost?
A) Purchase order preparation.
B) Production disruption.
C) Lost sales and lost customers.
D) Spoilage.
E) Both production disruption and lost sales and lost customers.

Question

Quizplus · Accepted Answer

Inventory shortage costs include all the consequences of not having enough inventory on hand, including both production disruptions and the loss of sales and customers. These shortages can lead to delays in production and dissatisfied customers who may turn to competitors, thus directly impacting a company's revenue and reputation.

Which of the Following Is Classified as an Inventory Shortage