Explanation:
Material prices, ordering costs, and keeping costs are the three major expense groups for the supermarket's inventory strategy. The money spent to Proctor and Gamble on the materials themselves is known as the material expense. Ordering prices, also known as procurement costs, are charged when a customer requests supplies from a retailer and are fixed so that they do not change depending on the scale of the order. Fixed examples include the following:
The costs include the time it takes to put the order, deal with the paperwork that comes with it, and the cost of shipping the order. The holding cost is the cost of keeping a single unit in inventory for a set amount of time, normally a year. This expense is subjective and covers the cost of capital as well as all of the costs of physically handling material, such as shrinkage, spoilage, or obsolescence, insurance, the cost of capital, the cost of storage space, and so on.
