1.
Which one of the following factors is not considered when calculating H, holding cost per unit per unit time?
Select one:
a. Depreciation
b. Rent
c. Demand
d. Opportunity Cost
e. Insurance
Expert Answer
Depreciation and amortization will be included because we will need a warehouse for the inventory, the equipment inside the warehouse and the warehouse itself will be part of CAPEX which needs depreciation. Rent and insurance are forms of operating expense which may be paid while the acquisition of a warehouse space for inventory. So, they will be included. The capital tied up in terms of holding inventory will lose potential
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