What is a type of inventory carrying cost?
A) cost of transporting inventory from suppliers
B) cost of preparing inventory purchase orders
C) interest cost related to inventory
D) cost related to stockouts of inventory

Question

Quizplus · Accepted Answer

Interest cost related to inventory is a type of inventory carrying cost. It includes the cost of financing inventory such as interest on loans, charges on overdrafts or credit lines, and opportunity cost of investing capital in inventory instead of other profitable projects. All the other options (transportation cost, purchase order cost, and stockout cost) are not examples of inventory carrying cost, but rather costs related to inventory management, procurement, and replenishment.

What Is a Type of Inventory Carrying Cost