The cost of owning and holding inventory is far greater than the cost of ordering inventory.

Question

Quizplus · Accepted Answer

Owning and holding inventory incurs various costs such as storage, insurance, obsolescence, and theft. These costs add up over time and can be significant. On the other hand, the cost of ordering inventory typically includes only the cost of placing an order with a supplier, which is usually much lower than the cost of holding inventory for an extended period. It is therefore more cost-effective to order inventory as needed rather than holding excess inventory.

The Cost of Owning and Holding Inventory Is Far Greater