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

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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52 views

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

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.

Uploaded by

venitia
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PPTX, PDF, TXT or read online on Scribd
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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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