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Managing Inventories to Increase Net Profit Requires Companies to Effectively

Question 5

Essay

Managing inventories to increase net profit requires companies to effectively manage costs associated with goods for sale.
Required:
Classify the below listed items as either Purchasing Costs,Ordering Costs,Carrying Costs,Stockout Costs,Costs of Quality or Shrinkage Costs.
 a. costs of obtaining purchase approvals  b. costs resulting from embezzlement by employees  c. internal failure costs  d. coportunity cost of the investment tied up in inventory  e. spoilage of stored items  f. costs of lost sales as a result of not having an iten requested  by a customer  g. costs of incoming freight  h. costs of matching invoices received to the items and the  i. curchase orders  i. costs of wages for work-in-process inspections \begin{array} { | l | l | } \hline\quad\quad\quad\quad\quad & \text { a. costs of obtaining purchase approvals } \\\hline & \text { b. costs resulting from embezzlement by employees } \\\hline & \text { c. internal failure costs } \\\hline & \text { d. coportunity cost of the investment tied up in inventory } \\\hline & \text { e. spoilage of stored items } \\\hline & \text { f. costs of lost sales as a result of not having an iten requested } \\& \text { by a customer } \\\hline& \text { g. costs of incoming freight } \\\hline & \text { h. costs of matching invoices received to the items and the } \\\hline & \text { i. curchase orders } \\\hline &\text { i. costs of wages for work-in-process inspections } \\\hline\end{array}
a.costs of obtaining purchase approvals
b.costs resulting from embezzlement by employees
c.internal failure costs
d.opportunity cost of the investment tied up in inventory
e.spoilage of stored items
f.costs of lost sales as a result of not having an item requested by a customer
g.costs of incoming freight
h.costs of matching invoices received to the items and the purchase orders
i.costs of wages for work-in-process inspections
j.costs that result from clerical errors

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a.Ordering Costs
b.Shrinkage C...

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