Give examples of costs included in annual carrying costs of inventory when using the EOQ decision model.
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Part 1
A.
Costs included in the carrying costs of inventory are incremental costs for such items as insurance, rent, obsolescence, spoilage and breakage plus the opportunity cost of capital (or required return on investment).
B.
Costs included in the carrying costs of inventory costs include the cost of obtaining purchase approvals, as well as other special processing costs.
C.
Costs included in the carrying costs of inventory include ordering costs plus any associated transportation costs incurred by expediting an order from a supplier.
D.
Costs included in the carrying costs of inventory include prevention costs, appraisal costs, internal failure costs, and external failure costs.