warehouse management Quiz 3

Which of the following is NOT considered a holding cost?

• Storage costs 

• Ordering costs 

What does the opportunity cost of holding inventory refer to?

• The lost potential income from investing capital elsewhere  

• The cost of handling and transporting inventory

Which cost is incurred when inventory becomes outdated and cannot be sold?

• Depreciation

• Obsolescence

Stockout costs can include which of the following?

• Lost sales

• Insurance premiums

Which of the following best describes depreciation in the context of inventory costs?

• The reduction in value of inventory over time

• The cost of insuring inventory

If a company has high levels of safety stock, which cost is most likely to increase?

• Holding cost

• Opportunity cost

What type of cost includes the expense of keeping inventory in a warehouse?

• Storage cost

• Stockout cost

Which of the following is an example of an ordering cost?

• Cost of inspecting and receiving new inventory

• Loss of inventory value due to obsolescence

What is the primary reason companies need to manage holding costs effectively?

• To minimize capital tied up in inventory and improve profitability

• To maximize warehouse space

Which cost is directly affected by the duration that inventory is held?

• Depreciation

• Transportation cost