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Agustin Palacios
on Oct 23, 2024

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An example of a shortage cost is:

A) time spent finding suppliers.
B) idle workers.
C) transportation costs.
D) foregone interest on working capital.

Shortage Cost

Costs incurred when demand exceeds supply, often including lost sales, expedited shipping costs, and decreased customer satisfaction.

Foregone Interest

The potential interest income lost when choosing to invest capital in one option over another.

Idle Workers

Employees who are not engaged in production or work activities due to lack of work, broken machinery, or inefficient job allocation, often leading to wasted resources.

  • Identify the distinctions among ordering, carrying, and shortage costs, and understand their effects on inventory management.
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Melissa MarinoOct 30, 2024
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