Anna Wren,sales manager for Pacific Lumber,tells Jason Peoples,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 represents the cost of a stockout, which occurs when an item is out of stock and leads to lost sales and potentially dissatisfied customers. Carrying costs refer to the cost of holding inventory, replenishment costs refer to the cost of ordering and receiving inventory, safety stock refers to holding additional inventory to mitigate the risk of stockouts, and reorder costs refer to the cost of placing an order for inventory.

Anna Wren,sales Manager for Pacific Lumber,tells Jason Peoples,the Firm's Inventory