Holding costs, or carrying costs, include all costs associated with storing unsold goods. These typically consist of:
* Insurance costs: Fees associated with insuring stored goods.
* Deterioration costs: Potential loss from goods that deteriorate, expire, or are rendered unusable over time.
* Pilferage costs: Losses due to theft or misplacement of goods.
These factors affect the total cost of ownership in asset management, ensuring that only essential stock levels are maintained to avoid unnecessary holding costs.
Options 1 and 2 include costs not generally classified under holding costs (such as the cost of sales), making D the correct answer.