________ fall with increases in the level of investment in current assets, while ________ increase.
A) Carrying costs; shortage costs.
B) Shortage costs; carrying costs.
C) Carrying costs; stock out costs.
D) Shortage costs; order costs.
E) Stock out costs; order costs.

Question

Quizplus · Accepted Answer

Carrying costs increase with the level of investment in current assets because they include expenses such as storage and insurance. Shortage costs, on the other hand, decrease as more is invested in current assets, reducing the likelihood of running out of stock.

________ Fall with Increases in the Level of Investment in Current