Holding /carrying costs
• Relates to the physical holding of items in storage.
• This includes insurance, interest , depreciation, obsolescence ,spoilage, shrinkage and warehouse costs ( electricity,security,service down to the cleaning material milk , tea, coffee.
Ordering costs
• Is associated with ordering and receiving of inventory.
• This includes determining how much is needed , type up invoice, inspecting of goods upon arrival for quality and quantity and moving goods to a temporary storage.
Shortage costs
• Occurs when the demand exceeds the supply of inventory on hand.
• This includes lost of opportunity to make a sale, loss of customer goodwill and lateness charges.
• Shortage costs are difficult to measure.Vendor selection
• Packaging
• Inventory and transportation costs
• Manufacturers range
• Technical assistance
• Delivery performance
• Quality and reputation of suppliers
• Financial strength of suppliers
• Labour/trade relation
• Availability of supply
• Warranties and guarantees

Characteristics of innovation
Innovation as a creation
• The focus is on using resources to invent, development of new goods and services, new way of doing things
Innovation as a diffusion and learning
• The focus is on acquiring supporting or using products and services or idea

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