CPIM Practice Exam

Demand costs are not considered a direct contributor to inventory costs. Instead, they are related to market dynamics and reflect the need for inventory rather than the costs associated with holding or procuring it. Inventory costs typically include carrying costs, which encompass storage, insurance, and depreciation; ordering costs, which involve expenses incurred to replenish inventory like shipping and labor; and obsolescence costs, which account for potential losses due to unsold inventory becoming outdated or unusable. Demand, while crucial for determining how much inventory should be held, does not inherently generate costs in the same way that the other elements do, making it the correct response in this context.