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:

Fine Acuity

pertains to the sharpness or clarity of vision, often measuring the ability to discern fine details.

Cones

Visual sensory receptors found at the back of the retina, responsible for color vision and sharpness of vision.

Similarity

The state of being alike or having attributes in common, often used in various contexts such as psychology, mathematics, and everyday comparisons.

Sensory Adaptation

Tendency of sensory receptor cells to become less responsive to a stimulus that is unchanging.