Mass distributors lower prices substantially to sell increased volumes of hardware products. What costs would hardware stores have to manage when maintaining larger-than-needed inventories by including them as overhead?
A)containment costs
B)stockout costs
C)holding costs
D)amortization costs

Question

Mass distributors lower prices substantially to sell increased volumes of hardware products. What costs would hardware stores have to manage when maintaining larger-than-needed inventories by including them as overhead?
A)containment costs  
B)stockout costs  
C)holding costs  
D)amortization costs

Quizplus · Accepted Answer

When maintaining larger-than-needed inventories, hardware stores would have to manage holding costs such as storage, handling, insurance, and financing costs associated with carrying excess inventory. Containment costs refer to the costs associated with preventing or controlling inventory shrinkage, while stockout costs are incurred when inventory levels are insufficient to meet demand. Amortization costs are associated with the depreciation of intangible assets over time and are not directly related to managing inventory.

Mass Distributors Lower Prices Substantially to Sell Increased Volumes of Hardware