Costs associated with purchasing the product (e.g., checking inventory, placing orders, receiving orders, stocking the product, paying invoices) are called?

• A. Acquisition Costs
• B. Carrying Costs
• C. Procurement Costs
• D. Stock Out Costs

Answer: (C)

The costs involved in obtaining inventory, including the steps to source and receive goods, are procurement costs. This covers checking what to buy, placing the order, accepting and putting away the shipment, and handling the payment of invoices. These activities are all part of the process of acquiring stock, distinct from the actual purchase price of the items and from costs tied to holding inventory (carrying costs) or costs incurred when stock is unavailable (stock-out costs).

Acquisition costs often refers to the price and direct costs of acquiring a product, which can be broader or narrower depending on context, but the described activities fit the procurement process best. Carrying costs pertain to storing and maintaining inventory, not the act of procuring it. Stock-out costs are the penalties or lost sales from running out of stock.