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    Controllable Inventory Costs

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    Analyze the four costs associated with maintaining an inventory to determine which appears to be most controllable by any organization. Explain your rationale.

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    Step 1

    The four costs associated with maintaining an inventory are ordering costs, setup costs, holding costs, and stock-out costs. The first is the ordering cost or the cost of acquiring the raw materials. This can be a fixed per-unit cost or have a discount component. The second cost is that setup cost or the administration cost related to the order, receiving the shipment, and processing the ...

    Solution Summary

    This solution discusses the four types of inventory costs, namely: ordering costs, set-up costs, holding costs and stock-out costs- and which of these is most controllable by the organization. A rationale for this argument is provided and supported by a scholarly resource.