Question

The Acme Toy Company introduced a new electric train, the Silver Bullet, in its Christmas catalog last year. Within four days of the catalog's mailing date, Acme had received phone orders for its entire inventory of trains. Jeff Murrah, the sales manager responsible for the Silver Bullet, was delighted with the product's success. However, his excitement was overshadowed by the ____ cost resulting from lost sales that his division would suffer.

Answer 1

Answer:

Stock-out cost

Explanation:

Stock out is a scenario in business where a company sells all available units of a product and runs out of inventory for that product. When this happens, the organization loses revenue as it cannot meet the subsequent demands of customers.

This cost incurred is known as stock out cost.

So, even though Jeff Murrah, the sales manager, was delighted with the product's success, his excitement was overshadowed by the stock out cost his division would incur.