Which of the following is included in Carrying Costs?

• A. Costs associated with storage, handling, and insurance
• B. Price the pharmacy pays for the product
• C. Costs associated with purchasing the product
• D. Cost of not having a product on the shelf

Answer: (A)

Carrying costs are the ongoing expenses of keeping inventory on hand. This includes the costs to store items, move and handle them, and insure them while they sit in stock. It also covers related ongoing expenses like taxes, potential depreciation or obsolescence, shrinkage, and the opportunity cost of the capital tied up in the inventory.

Among the options, the description of storage, handling, and insurance matches these holding costs. The price paid for the product is a purchase cost, not a carrying cost. Costs tied to purchasing the product refer to procurement expenses. And the cost of not having a product on the shelf describes stockout costs, which are separate from carrying costs.