Inventory Holding Costs
Costs of keeping inventory: storage, insurance, obsolescence, deterioration, financing.
Real World
Amazon warehouses hold millions of items, incurring enormous storage, insurance, and financing costs — which is why Amazon Prime's fast delivery model is designed to minimise time stock sits idle.
Exam Focus
When 'evaluate' holding costs, always weigh them against stockout costs — one-sided answers lose analysis marks.
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