If we are producing the product or component in-house,then the total inventory-related cost on an annual basis is ______.
A)the sum of total annual setup cost and total annual holding cost less the sum of total annual stock-out cost and total annual materials purchase cost
B)the ratio of the sum of total annual setup cost and total annual holding cost to the sum of total annual stock-out cost and total annual materials purchase cost
C)total annual setup cost + total annual holding cost + total annual stock-out cost + total annual materials purchase cost
D)the product of the sum of total annual setup cost and total annual holding cost to the sum of total annual stock-out cost and total annual materials purchase cost

Question

Quizplus · Accepted Answer

The total inventory-related cost on an annual basis when producing a product or component in-house is the sum of all the costs associated with inventory including setup costs, holding costs, stock-out costs and materials purchase costs. Therefore, option C is the correct choice.

If We Are Producing the Product or Component In-House,then the Total