Which of the following statement is FALSE about inventory management? Setup cost

ID: 376431 • Letter: W

Question

Which of the following statement is FALSE about inventory management?

Setup cost is independent of order size.

The primary reason for keeping inventories low is that inventory represents a temporary monetary investment.

One component of the ordering cost of inventory is shrinkage.

A backorder occurs when a customer order cannot be filled when it is placed, but is instead filled later.

Setup cost is independent of order size.

The primary reason for keeping inventories low is that inventory represents a temporary monetary investment.

One component of the ordering cost of inventory is shrinkage.

A backorder occurs when a customer order cannot be filled when it is placed, but is instead filled later.

Answer C. Shrinkage is not a an ordering cost of inventory rather it is a cost related to the loss of inventory.

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