Anya, sales manager for Pacific Lumber, tells Ricardo, the firm's inventory manager, that the firm's failure to have adequate supplies of pressure-treated lumber on hand has cost the firm $175,000 in lost sales. This figure represents which of the following inventory management costs?

Question

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The $175,000 in lost sales due to a lack of adequate supplies of pressure-treated lumber is representative of stockout costs, which occur when inventory is not available when it is needed. Carrying costs pertain to the cost of holding inventory, replenishment costs involve the cost of reordering and replacing inventory, safety stock relates to holding extra inventory to hedge against the risk of stockouts, and reorder costs pertain to the cost of placing and receiving new orders.

Anya, Sales Manager for Pacific Lumber, Tells Ricardo, the Firm's