Miller, sales manager for Pacific Lumber, tells Fred, 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

Quizplus · Accepted Answer

The cost of lost sales due to inadequate inventory is known as a stockout cost. It represents the potential sales revenue that was lost because the firm did not have enough inventory on hand to meet customer demand.

Miller, Sales Manager for Pacific Lumber, Tells Fred, the Firm's