Which item is NOT listed as a key component of total landed costs?

Which item is NOT listed as a key component of total landed costs?

• A. Lifecycle costs
• B. Inventory costs
• C. Transaction costs
• D. Strategic sourcing costs

Answer: (D)

Total landed cost sums up every expense from the supplier to the point the goods are ready for use. This includes the product price plus inbound costs like transportation, insurance, duties and taxes, handling, receiving, warehousing, and any internal movement, plus the administrative costs tied to getting and paying for the goods. Inventory costs (carrying costs) are part of this because storing and handling stock adds to the total spent. Transaction costs cover the procurement process itself—order processing, paperwork, and related admin—also part of what you pay to bring goods in. Lifecycle costs can be included in some frameworks as costs incurred over the asset’s life, which can fall under the broader umbrella of costs considered when evaluating landed costs. Strategic sourcing costs, however, relate to the planning, supplier selection, and negotiation activities used to establish a supply arrangement, not the actual costs incurred once goods are being moved and stored. That’s why strategic sourcing costs aren’t listed as a key component of total landed costs.

Total landed cost sums up every expense from the supplier to the point the goods are ready for use. This includes the product price plus inbound costs like transportation, insurance, duties and taxes, handling, receiving, warehousing, and any internal movement, plus the administrative costs tied to getting and paying for the goods. Inventory costs (carrying costs) are part of this because storing and handling stock adds to the total spent. Transaction costs cover the procurement process itself—order processing, paperwork, and related admin—also part of what you pay to bring goods in. Lifecycle costs can be included in some frameworks as costs incurred over the asset’s life, which can fall under the broader umbrella of costs considered when evaluating landed costs. Strategic sourcing costs, however, relate to the planning, supplier selection, and negotiation activities used to establish a supply arrangement, not the actual costs incurred once goods are being moved and stored. That’s why strategic sourcing costs aren’t listed as a key component of total landed costs.