Unit cost (U): the price for an item charged by the
supplier, or the cost to the organisation of acquiring
one unit of the item.
• Reorder cost (R): the cost of placing a repeat order
for an item.
• Holding cost (H): the cost of holding one unit of an
item in stock for a unit period of time.
• Shortage cost (S): occurs when an item is needed but
it cannot be supplied from stock.