Question

In the context of inventory costs, _____ can reflect backorders or service interruptions for external customers.

a. holding costs
b. stockout costs
c. ordering costs
d. setup costs

Answer 1

b. stockout costs

Step-by-step explanation:

Stockout cost is the cost in which the income is lost or the expenses that are attached to the inventory shortage

It can be occurred in two ways

1. Sales-related: In the case when the customer wants to order a product but at that time the stock is not available so here the company lost the gross margin

2. Inside process-related: This would arised when the company required inventory for running a production but at that time the inventory is not available so the company could incurred extra cost to purchase the inventory

So by above there is an interruption of a service

Therefore the option b is correct