Costs associated with backordering products are called _____ costs.
A) holding
B) shortage
C) ordering
D) setup

Question

Quizplus · Accepted Answer

Backordering products means that customers have placed orders but the products are temporarily out of stock. This results in a shortage cost as the business may lose sales and customer loyalty due to the delay. Holding costs are associated with keeping inventory in stock, ordering costs are related to placing orders, and setup costs are related to preparing equipment or machines for production.

Costs Associated with Backordering Products Are Called _____ Costs