Question

Backorder and stockouts typically do not include which of the following costs?

1) Ordering costs
2) Holding costs
3) Shortage costs
4) Transportation costs

Answer 1

Backorder and stockouts typically do not include shortage costs. The other costs such as ordering costs, holding costs, and transportation costs are generally included in backorder and stockout costs.

Step-by-step explanation:

Backorder and stockouts typically do not include shortage costs. Backorder and stockouts typically do not include shortage costs. The other costs such as ordering costs, holding costs, and transportation costs are generally included in backorder and stockout costs.

Shortage costs refer to the costs incurred when a company is unable to meet customer demand due to insufficient inventory. This can include lost sales, customer dissatisfaction, and damage to the company's reputation. On the other hand, backorder and stockout costs usually include ordering costs (costs associated with placing orders), holding costs (costs of storing inventory), and transportation costs (costs of moving goods).