All else the same, ________ costs are greatest when the firm holds a small quantity of inventory, and ___________ costs are greatest when there is a large quantity of inventory on hand.

Question

Quizplus · Accepted Answer

Restocking costs are highest when inventory levels are low because more frequent orders are needed, increasing the costs associated with ordering and receiving goods. Carrying costs, which include storage, insurance, and opportunity costs, increase as the quantity of inventory on hand grows.

All Else the Same, ________ Costs Are Greatest When the Firm