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Stock-out costs
These are the opportunity costs of running out of stock. They comprise:
1) The costs of lost customer sales, and therefore lost contribution to fixed costs.
2) Potential loss of goodwill with customers whose demand cannot be net.
3 Acquiring emergency supplies at higher prices to meet demand.
4) Cost production of finished goods, where raw material stock-outs occur.
The computation of safety stocks lingers on demand forecasts. The manager will have some notion (usually based on past experience) of the range of daily demand. That is the probability that exists for usage of various quantities.
i want to get the answer for exercises 2.1 and 2.2 on strategic and tactical decisions
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What is Direct material cost variance It can be defined as the difference between the standard costs of direct material specified and the actual cost of direct material used.
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identify and explain cost classification for performance evaluation
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