ENTREPRENEURIAL OPERATIONS
INVENTORY MANAGEMENT
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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False
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True
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Either A or B
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None of the above
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Detailed explanation-1: -Key Takeaways. Inventory carrying cost is the total of all expenses related to storing unsold goods. The total includes intangibles like depreciation and lost opportunity cost as well as warehousing costs. A business’ inventory carrying costs will generally total about 20% to 30% of its total inventory value.
Detailed explanation-2: -Excess inventory can lead to poor quality goods and degradation. If you’ve got high levels of excess stock, the chances are you have low inventory turnover, which means you’re not turning all your stock on a regular basis. Unfortunately, excess stock that sits on warehouse shelves can begin to deteriorate and perish.
Detailed explanation-3: -Ordering, holding, carrying, shortage and spoilage costs make up some of the main categories of inventory-related costs.