Managing Inventories to Increase Net Profit Requires Companies to Effectively

question 52

Essay

Managing inventories to increase net profit requires companies to effectively manage costs associated with goods for sale.
Required:
Classify the below listed items as either Purchasing Costs,Ordering Costs,Carrying Costs,Stockout Costs,Costs of Quality or Shrinkage Costs.
$$\begin{array} { | l | l | } \hline\quad\quad\quad\quad\quad & \text { a. costs of obtaining purchase approvals } \\\hline & \text { b. costs resulting from embezzlement by employees } \\\hline & \text { c. internal failure costs } \\\hline & \text { d. coportunity cost of the investment tied up in inventory } \\\hline & \text { e. spoilage of stored items } \\\hline & \text { f. costs of lost sales as a result of not having an iten requested } \\& \text { by a customer } \\\hline& \text { g. costs of incoming freight } \\\hline & \text { h. costs of matching invoices received to the items and the } \\\hline & \text { i. curchase orders } \\\hline &\text { i. costs of wages for work-in-process inspections } \\\hline\end{array}$$
a.costs of obtaining purchase approvals
b.costs resulting from embezzlement by employees
c.internal failure costs
d.opportunity cost of the investment tied up in inventory
e.spoilage of stored items
f.costs of lost sales as a result of not having an item requested by a customer
g.costs of incoming freight
h.costs of matching invoices received to the items and the purchase orders
i.costs of wages for work-in-process inspections
j.costs that result from clerical errors

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Definitions:

Lancelets

Small, fish-like marine animals belonging to the subphylum Cephalochordata, known for their role as a model organism in evolutionary biology.

Nephridiopores

External openings of the nephridia, which are excretory organs in many invertebrates, allowing waste to exit the body.

Nephridia

Excretory organs in many invertebrates, including annelids and mollusks, that filter fluid directly from the body cavity.

Mollusks

A diverse group of invertebrate animals with a soft body, many of which have a hard shell, including snails, clams, and squid.