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What Is Avoidable Cost or Cost Avoidance?

In logistics, an avoidable cost is the cost of an activity that can be avoided if that activity is not performed, resulting in a monetary savings. Avoidable costs are typically variable costs, while most fixed costs are unavoidable. Avoidable costs can include things such as labor costs or packaging. As an example, within a warehouse, organizational tools such as racks, are unavoidable. However, upgrading to the high-end, most expensive racking solutions is an avoidable cost when general, less-expensive racks would work.