From Supply Chain Logistics Management, Bowersox, Closs, Cooper, & Bowersox, p. 185:
You have been asked to establish an inventory carrying cost percent to supply your firm’s supply chain planning initiatives.
- Identify and describe the carrying cost components.
- Review the various approaches to determine the opportunity cost component and provide the rationale for each.
- Recommend which approach you would use and why.
- Identify the implications of the opportunity cost decision on supply chain design decisions.
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