Which of the following observations about the total cost approach is NOT true?
A) Includes transportation costs.
B) Helps find the lowest total cost for the right service level.
C) Focuses on direct costs and doesn't consider the possible costs of lost sales.
D) Uses the tools of cost accounting and economics.
E) Involves evaluating each possible physical distribution system and identifying all of the costs of each alternative.

Question

Quizplus · Accepted Answer

The statement that the total cost approach only focuses on direct costs and doesn't consider the possible costs of lost sales is incorrect. The total cost approach does consider the possible costs of lost sales, as well as indirect costs such as warehouse costs and inventory carrying costs.

Which of the Following Observations About the Total Cost Approach