The Acme Toy Company introduced a new electric train, the Silver Bullet, in its Christmas catalogue last year.Within four days of the catalog's mailing date, Acme had received phone orders for its entire inventory of trains.Edmundo Murrah, the sales manager responsible for the Silver Bullet, was delighted with the product's success.However, his excitement was overshadowed by the ____ cost resulting from lost sales that his division would suffer.

Question

Quizplus · Accepted Answer

A stock-out cost refers to the cost incurred by a business due to the unavailability of a product which results in lost sales. In this case, Acme Toy Company sold out its entire inventory of the Silver Bullet train within four days of the Christmas catalog's mailing date, resulting in lost sales. The cost associated with these lost sales is a stock-out cost.

The Acme Toy Company Introduced a New Electric Train, the Silver