Which of the Following Costs Is a Relevant Inventory Stockout

question 62

Multiple Choice

Which of the following costs is a relevant inventory stockout cost?

• A) The costs of obsolescence and costs of insurance that change with the quantity of inventory held.
• B) The return forgone by investing capital in inventory rather than elsewhere.
• C) The lost contribution margin on sales forgone as a result of customer dissatisfaction due to unavailability of goods.
• D) The costs of storage space owned that cannot be used for other profitable purposes when inventories decrease.

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Definitions:

Representative Sample

A sample that accurately reflects the characteristics of the population from which it is drawn.

Standard Deviation

A statistical measure that quantifies the amount of variation or dispersion in a set of data values.

Sample Size

The number of individuals or observations included in a study, important for the reliability and validity of statistical analyses.

Population Average

A statistical measure that reflects the average characteristic of a particular population.