Business A-Level
holding cost versus stockout cost
What holding cost versus stockout cost means in Business A-Level, as defined for AQA.
Definition of holding cost versus stockout cost
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Read the wording for your board, then hide it and explain holding cost versus stockout cost in your own words. Rough notes are fine. This is a self-check, with no mark or grade.
Reference: AQA
The cost of holding stock, which is cash tied up, storage, insurance and obsolescence, set against the cost of running out, which is lost contribution, idle machines and emergency deliveries at a premium.
Topics that use holding cost versus stockout cost
- Making operational decisions to improve performance: managing inventory and supply chains (AQA A-Level)
Related terms
- capacity utilisation
- Core vs non-core activities
- effectiveness versus efficiency
- ethical sourcing
- outsourcing
- producing to order
- re-order level and quantity
- single and multiple sourcing
Using holding cost versus stockout cost in the exam
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