Respuesta :
Among different types of costs associated with inventory, the costs of obtaining purchase approvals are ordering costs.
Ordering costs are the expenses which are associated with creating and processing orders to a supplier. Ordering Costs also known as setup cost, thus they are incurred at the time of placing an order.
It is a firms responsibility to monitor its ordering costs and inventory carrying costs in order to properly balance order sizes and thereby minimize overall costs. There will be an ordering cost of some size, no matter how small an order may be.
Hence, the total amount of ordering costs that a business incurs will increase with the number of orders placed.
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