Ordering Cost

  Order Cost is best defined by the APICS Dictionary, 15’th edition as; a direct labor cost incurred when a purchaser places an order.  Ordering costs are different from the “Order Cost.”  The ordering costs are all the costs associated with the purchase order and any labor involved in inspecting the goods when received, any labor associated with stocking the received items, invoicing suppliers and issuing payments.  APICS defines ordering costs in the 15’th edition dictionary as; the costs that increase as the number of orders placed increases.  Used in calculating order quantities.  Includes costs related to clerical work of preparing, releasing, monitoring and receiving orders; the physical handling of goods; inspections; and setup costs, as applicable.

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