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CIPS Exam L4M7 Topic 10 Question 16 Discussion

Actual exam question for CIPS's L4M7 exam
Question #: 16
Topic #: 10
[All L4M7 Questions]

Among different types of costs associated with inventory, the opportunity cost of the investment tied up in inventory belongs to which of the following?

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Suggested Answer: C

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

by Arlette at Apr 24, 2023, 07:14 PM

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Pilar
28 days 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!
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Pansy
29 days 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.
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Jesusa
5 days ago
I think you're right, holding costs make sense for opportunity cost.
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Socorro
1 months 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.
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Carey
3 days ago
I think you're right, it makes sense that the opportunity cost would fall under holding costs.
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Angelica
1 months 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.
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Delmy
1 months 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.
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Raymon
2 months 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.
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Inocencia
2 months ago
I agree with Tatum, holding costs make sense because it's the cost of keeping inventory in stock.
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Tatum
2 months ago
I think the opportunity cost belongs to holding costs.
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