Asked by
Agustin Palacios
on Oct 23, 2024Verified
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.
Verified Answer
MM
Learning Objectives
- Identify the distinctions among ordering, carrying, and shortage costs, and understand their effects on inventory management.