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Inventory costs:

Seismic Testing is involved in the business of testing subterranean areas for the presence of oil and other minerals. In its business, it uses a highly specialized and very dangerous explosive to generate the subterranean sound ways that it interprets to determine what is underground in a specific area. Because the explosive it uses is so specialized and difficult to obtain, it keeps a large supply of the explosive on hand.

1) What are the costs that Seismic Testing incurs in maintaining a large inventory of the explosive?

2) How might it reduce its inventory carrying costs?

Solution Summary

This posting contains answers to following questions on Inventory costs.