MANAGEMENT

Detailed explanation-1: -Carrying cost includes the cost of renting the warehouse where the stock is kept, operating the warehouse, paying the salaries of the employees working at the warehouse, any loss of inventory due to theft and damage, and insuring the inventory.

Detailed explanation-2: -Inventory carrying costs include expenses incurred from storing, transporting, and handling inventory as well as labor costs incurred in those processes. They also include taxes, insurance, item replacement, depreciation, and opportunity costs.

Detailed explanation-3: -Inventory cost includes the costs to order and hold inventory, as well as to administer the related paperwork. This cost is examined by management as part of its evaluation of how much inventory to keep on hand.