What is the rationale behind charging Lost Rentals (LRs)?

Charging Lost Rentals (LRs) serves the primary purpose of compensating for the costs associated with lost or destroyed garments. When clients fail to return rental items, the company incurs expenses related to replacing those items. This charge helps ensure that the costs of maintaining inventory and providing services are covered, allowing the company to continue offering its rental services without incurring financial losses from unreturned products.

While there are benefits to various approaches in business, such as managing inventory costs or increasing profit margins, those are not the central rationale for charging LRs. The key focus of LRs is specifically tied to reimbursing the company for the losses incurred due to unreturned items, ensuring sustainability in their service offerings. Enforcing contractual obligations is also important in a broader sense, but the immediate financial reasoning relates more directly to recovering costs associated with lost merchandise.