When the cost of lost sales due to stock-outs is greater than the sum of ordering, buying, and maintaining the inventory, the company needs to :
A) Stock up more
B) Reduce inventory
C) Increase inventory carrying cost
D) Decrease the quality of inventory

Question

Quizplus · Accepted Answer

When the cost of lost sales due to stock-outs exceeds the costs associated with ordering, buying, and maintaining inventory, it indicates that the company is losing potential revenue due to insufficient stock. To mitigate this, the company should stock up more to meet demand and minimize lost sales.

When the Cost of Lost Sales Due to Stock-Outs Is