Conquer the CLTD Challenge 2026 – Navigate Your Path to Logistics Success!

Stockout costs represent the costs that occur when inventory is unavailable to meet customer demand. The immediate loss of revenue is a prime example of stockout costs because it reflects the income that a business forgoes when it cannot fulfill customer orders due to insufficient stock. When a company experiences a stockout, customers may turn to competitors, leading to lost sales and a direct impact on the bottom line.

The other options, while related to inventory and costs in general, do not specifically reflect the situation where there is insufficient inventory to meet demand. Capital costs relate to the investment in assets and equipment, taxes on inventory refer to the financial obligations associated with holding stock, and insurance concerns the protection of goods already held. These do not convey the direct loss of revenue resulting from missed sales opportunities associated with stock shortages.