Certified Supply Chain Professional (CSCP) Practice Exam

Which of the following is NOT a component of carrying costs?

1. Storage costs

2. Risk costs

3. Ordering costs

4. Capital costs

The correct answer is: Ordering costs

Carrying costs, which are associated with holding inventory, typically include several key components that reflect the expenses incurred to maintain and store inventory over time. Among these components are storage costs, which encompass the expenses related to warehouse space, utilities, and handling of the inventory. Risk costs account for the potential loss due to obsolescence, theft, or damage to the inventory. Capital costs represent the opportunity cost of the funds tied up in inventory, as these funds could have been invested elsewhere. Ordering costs, however, pertain to the expenses incurred every time an order is placed for inventory replenishment rather than the costs associated with holding that inventory. These costs include expenses related to processing the order, shipping and handling, and receiving the inventory. Therefore, ordering costs do not fall under carrying costs, making this the correct answer in the context of the components of carrying costs.