What role do opportunity costs play?

The term opportunity costs refers to all types of costs that arise when time or capital could have been better used elsewhere. These are also known as alternative costs. The amount of opportunity costs always depends on the decisions made, and accurately determining them can be challenging.

A good overview can be gained by distinguishing the different types of opportunity costs:

Procurement Costs:
These include expenses related to purchasing, management, storage, and supplier-related costs.

Storage Costs:
Managing a warehouse always incurs costs. The less organized and more confusing the warehouse, the higher the resulting costs.

Transportation Costs:
These involve the transport of materials, raw goods, auxiliary products, and components. This area is highly sensitive to price fluctuations.