Setup or Ordering Costs
These are fixed cost- usually associated with the production of a lot internally or the placing of an order externally with a vendor. In other words. these costs are independent of the number of units that are requested. Setup costs are related to the amount of time needed to adjust the equipment to perform a specific task. This would include the alignment of special tooling such as jigs and fixtures. Order costs pertain to the costs involved in placing an order a vendor. These may include telephone charges, a delivery fee, expediting costs, and the time required to process a purchase order.