What is one function of carrying costs?

Carrying costs are a crucial aspect of inventory management as they represent the total expenses associated with holding inventory over a period. These costs typically include multiple factors, such as warehousing expenses, insurance, depreciation, and costs associated with stock obsolescence or spoilage. Understanding and managing carrying costs is fundamental for businesses, as high carrying costs can impact profitability and cash flow.

In contrast, the other options focus on different areas of supply chain or inventory practices. While assessing supplier performance is essential for maintaining quality and efficiency in procurement, it does not relate to the costs associated with holding inventory. Similarly, managing customer relationships is vital for sales and service but is not directly linked to the financial implications of carrying inventory. Reducing production time pertains more to operational efficiency and does not address the financial impact of holding inventories. Thus, the core function of carrying costs is to encapsulate the total expenses incurred while maintaining inventory, which is encapsulated perfectly by the correct answer.