What are the major relevant costs in maintaining safety stock?
A)carrying costs and purchasing costs
B)ordering costs and purchasing costs
C)ordering costs and stockout costs
D)stockout costs and carrying costs

Question

Quizplus · Accepted Answer

The major relevant costs in maintaining safety stock are stockout costs and carrying costs. Stockout costs encompass the costs incurred when a stockout occurs, such as lost sales, customer dissatisfaction, and potential damage to the company's reputation. Carrying costs refer to the costs of storing and managing inventory, such as rent, utilities, insurance, and salaries of personnel. Ordering costs and purchasing costs are not directly associated with safety stock.

What Are the Major Relevant Costs in Maintaining Safety Stock