MENU
Among different types of costs associated with inventory, the opportunity cost of the investment tied up in inventory belongs to which of the following?
Suggested Answer: C
Get Premium L4M7 Questions
as Interactive Web-Based Practice Test or PDF
Real Exam Format
Detailed Explanations
Instant Access
Get Your Practice Test
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
30 comments · newest first
RE
Reta
12 months ago
Purchase price doesn't cover opportunity costs, just saying!
LE
Leeann
1 year ago
Wait, is opportunity cost really tied to inventory like that?
KI
Kimbery
1 year ago
I thought opportunity cost was just about lost sales?
HU
Hubert
1 year ago
I disagree, it's more about acquisition costs.
GL
Glenn
1 year ago
It's definitely related to holding costs.
PA
Pamella
1 year ago
I feel like this is similar to a question we did on stockouts, but I can't recall how opportunity costs fit in.
EL
Elly
1 year ago
I’m a bit confused; I thought purchase price was more about the actual cost of buying the inventory, not the opportunity cost.
IR
Irene
1 year ago
I remember a practice question that mentioned opportunity costs, and I think it was linked to acquisition costs.
LA
Laurene
1 year ago
I think the opportunity cost is related to holding costs, but I'm not entirely sure.
MA
Marge
1 year ago
Okay, let me think this through. The SDLC has planning, analysis, design, implementation, and maintenance phases. Media sanitation sounds like it would be part of the implementation phase, so I'm going to go with C.
BE
Beatriz
1 year ago
I feel pretty confident about this one. The question is asking the developer to fulfill the merchant's requirement to sell a combination of four existing products under a unique product ID. Based on that, I think the best option is A - Create a unique product called 'Our Top Combo' and add the four products into the Product Bundles tab.
KA
Kasandra
1 year ago
Okay, let's see. I know Cisco has some industrial Ethernet switch products, so that's probably the right direction to look in. I'll have to review my notes on their roadside infrastructure solutions.
PI
Pilar
1 year ago
Wait, so the opportunity cost is the cost of not being able to use that money for something else? In that case, it's definitely holding costs. Holding onto that inventory is costing me potential investments!
PA
Pansy
1 year ago
Opportunity cost? Isn't that like when you have to give up something to get something else? In that case, it's gotta be the holding costs. Can't use that money for anything else while it's sitting in inventory.
NA
Nathan
1 year ago
Holding costs are definitely the opportunity cost in this case.
KE
Kenneth
1 year ago
I agree, holding costs prevent you from using that money for other investments.
MA
Mattie
1 year ago
Yeah, holding costs tie up the investment in inventory, so it's definitely the opportunity cost.
JE
Jesusa
1 year ago
I think you're right, holding costs make sense for opportunity cost.
SO
Socorro
1 year ago
I'm pretty sure it's C) Holding costs. The opportunity cost is the cost of not being able to use that capital for other purposes.
HY
Hyman
1 year ago
I agree, holding costs would be the category that the opportunity cost of the investment tied up in inventory falls under.
LE
Leonard
1 year ago
Yeah, holding costs include the cost of capital tied up in inventory, so it definitely fits.
CA
Carey
1 year ago
I think you're right, it makes sense that the opportunity cost would fall under holding costs.
AN
Angelica
2 years ago
Holding costs makes the most sense to me. After all, the opportunity cost is the cost of not being able to use that money for something else while it's tied up in inventory.
DE
Deeanna
1 year ago
Holding costs definitely make the most sense in this scenario.
HE
Helaine
1 year ago
Yes, holding costs are the best fit for the opportunity cost of the investment tied up in inventory.
IS
Isabella
1 year ago
I agree, holding costs represent the opportunity cost of tying up money in inventory.
DE
Delmy
2 years ago
Opportunity cost of inventory investment? Hmm, that's gotta be holding costs, right? I mean, that money could be used for other investments instead.
RA
Raymon
2 years ago
I'm not sure, but I think it might be acquisition costs because that's the cost of obtaining the inventory in the first place.
IN
Inocencia
2 years ago
I agree with Tatum, holding costs make sense because it's the cost of keeping inventory in stock.
TA
Tatum
2 years ago
I think the opportunity cost belongs to holding costs.