APICS Certified in Logistics, Transportation and Distribution (CLTD) — Question 143

Which of the following costs are the most intangible and subjective of all the carrying cost elements?

Answer options

• A. Risk cost
• B. Storage cost
• C. Service cost
• D. Capital cost

Correct answer: D

Explanation

Capital cost is considered the most intangible and subjective element of carrying costs because it involves the opportunity cost of using funds for inventory instead of other investments. In contrast, storage cost, service cost, and risk cost are more quantifiable and can be calculated based on tangible metrics, making them less subjective.