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  • Inventory Costs: - Inventory Carrying Cost - Cost of Ordering - Cost of Shortages

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    Inventory costs include inventory carrying costs like interest and warehousing, costs of ordering like placing purchase orders, and costs of shortages from unexpected demand surges, late supplier deliveries, or defective components leading to rejected lots. Maintaining the right inventory levels balances these costs.

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    Inventory Costs

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    Inventory costs include inventory carrying costs like interest and warehousing, costs of ordering like placing purchase orders, and costs of shortages from unexpected demand surges, late supplier deliveries, or defective components leading to rejected lots. Maintaining the right inventory levels balances these costs.

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    © All Rights Reserved
    Download as PPTX, PDF, TXT or read online from Scribd
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    10 views4 pages

    Inventory Costs: - Inventory Carrying Cost - Cost of Ordering - Cost of Shortages

    Uploaded by

    venitia
    Inventory costs include inventory carrying costs like interest and warehousing, costs of ordering like placing purchase orders, and costs of shortages from unexpected demand surges, late supplier deliveries, or defective components leading to rejected lots. Maintaining the right inventory levels balances these costs.

    Copyright:

    © All Rights Reserved
    Download as PPTX, PDF, TXT or read online from Scribd
    Flag for inappropriate content
    of 4

    Inventory Costs

    • Inventory carrying cost


    • Cost of Ordering
    • Cost of shortages
    Inventory carrying cost
    • Interest for short term borrowals for working
    capital required for inventory investment.
    • Cost of stores and warehousing.
    • Administrative cost related to maintaining
    inventory.
    Cost of Ordering
    Cost of shortages
    • When there is sudden surge in demand.
    • Supplier not delivering the material as per the
    schedule.
    • Rejection of lot due to defective components.

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