The correct answer is: B. Carrying cost
Carrying cost is the cost of holding inventory, including the cost of capital, storage, insurance, and obsolescence. Opportunity cost of capital invested in inventory is a component of carrying cost.
Ordering cost is the cost of placing an order, including the cost of the order form, the cost of shipping the order, and the cost of receiving the order.
Stock-out cost is the cost of not having enough inventory to meet customer demand, including the cost of lost sales, the cost of expediting orders, and the cost of customer dissatisfaction.
Overheads are the costs of running a business that are not directly related to the production of goods or services, such as rent, utilities, and salaries.
Here is a table that summarizes the different types of inventory costs:
| Cost | Description |
|—|—|
| Carrying cost | The cost of holding inventory, including the cost of capital, storage, insurance, and obsolescence |
| Ordering cost | The cost of placing an order, including the cost of the order form, the cost of shipping the order, and the cost of receiving the order |
| Stock-out cost | The cost of not having enough inventory to meet customer demand, including the cost of lost sales, the cost of expediting orders, and the cost of customer dissatisfaction |
| Overheads | The costs of running a business that are not directly related to the production of goods or services, such as rent, utilities, and salaries |