Question

Which of the following inventory costs represents the cost of loss of demand due to shortage in supplies?

• A. Stockout cost
• B. Unit cost
• C. Procurement cost
• D. Carrying cost

Answer 1

Answer:

A. Stockout cost

The inventory cost that represents the cost of loss of demand due to shortage in supplies is stockout cost. Stockout cost refers to the financial impact incurred when inventory is insufficient to meet customer demand, leading to lost sales and potentially dissatisfied customers.