CIPS Exam L4M7 Topic 10 Question 16 Discussion

Actual exam question for CIPS's L4M7 exam

Question #: 16
Topic #: 10

[All L4M7 Questions]

Among different types of costs associated with inventory, the opportunity cost of the investment tied up in inventory belongs to which of the following?

AAcquisition costs

BPurchase price

CHolding costs

DCosts of stockouts

Show Suggested Answer

Suggested Answer: C

For single items, an extra investment in inventory (higher levels of safety stock) will always in-crease customer service levels. Conversely, higher service levels imply larger quantities of safety stocks and an increased investment in inventory. (Procurement and Supply Chain Management - 9th Edition)

LO 2, AC 2.2

by Arlette at Apr 24, 2023, 07:14 PM

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Inocencia

3 days ago

I agree with Tatum, holding costs make sense because it's the cost of keeping inventory in stock.

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Tatum

4 days ago

I think the opportunity cost belongs to holding costs.

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