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: -Ordering Cost is dependant and varies based on two factors-The cost of ordering excess and the Cost of ordering too less. Both these factors move in opposite directions to each other. Ordering excess quantity will result in carrying cost of inventory.

Detailed explanation-3: -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-4: -Ordering, holding, carrying, shortage and spoilage costs make up some of the main categories of inventory-related costs.