A firm must track three types of costs to determine the correct level of inventory to keep in stock: purchasing costs,inventory carrying costs,and the costs incurred by

Question

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Stockouts refer to the situation where a customer wants to purchase a product but it is not available in the inventory. This results in lost sales as well as damage to the firm's reputation. Therefore, tracking the costs associated with stockouts is necessary to determine the level of safety stock that needs to be maintained to avoid such situations. However, the other options (B, C, D, and E) are not directly related to inventory management costs.

A Firm Must Track Three Types of Costs to Determine