Which of the Following Are Considered to Be Shortage Costs

question 36

Multiple Choice

Which of the following are considered to be shortage costs?
I.the cost of placing an order
II.production disruptions caused by the inventory
III.lost sales due to limited selection
IV.opportunity cost associated with highly liquid assets

• A)I and III only
• B)II and IV only
• C)II,III and IV only
• D)I,II and III only
• E)I and II only

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Definitions:

Optimal Amount

The ideal quantity of a good or resource that maximizes efficiency or value.

R&D

Stands for Research and Development, a business or government activity that involves the investment of resources in developing new products, services, or processes.

Total Utility

The total satisfaction or benefit obtained from consuming a particular quantity of goods or services.

Specific Amount

A specific amount refers to a particular sum or quantity of something, defined by a number or measure.