ECONOMICS

Detailed explanation-1: -Ordering costs are the expenses your company incurs to purchase and receive the products it stocks in its inventory. These ordering costs can include shipping fees, unexpected transportation costs, inspection fees and other expenses necessary to acquire inventory products.

Detailed explanation-2: -Obsolescence factors are not included in the ordering cost of the product since they are always accounted for in the books of the business as depreciation or impairment cost.

Detailed explanation-3: -Ordering costs are considered expenses related to placing orders for new inventory. Transportation, shipping fees, inspection fees, and other expenses for conveying the order come under it. These costs are generally fixed in nature. These costs are a component in calculating the economic order quantity (EOQ).