If the ordering cost is $1000, the buying cost is $ 1500, the cost of maintaining the inventory is $500, and the cost of lost sales due to stock-outs is $4000, the company must:
A) Increase the inventory carrying cost
B) Stock up more
C) Reduce inventory
D) Decrease the quality of inventory

Question

Quizplus · Accepted Answer

Stocking up more can help reduce the cost of lost sales due to stock-outs, which is significantly higher than the other costs mentioned.

If the Ordering Cost Is $1000, the Buying Cost Is