California offers tax exemptions to those who served in the military and have been honorably discharged and have lived in California for a certain period of time.
One such exemption is in property. Chip as a veteran of the Desert Storm, qualifies for this assuming he meets the other requirements such as residency and value limits on the property owned.
Holding costs are costs that result from keeping inventory in storage. In this case, order processing is related to sales, and sales mean more inventory turnover, exactly the opposite to inventory accumulation.
The other costs described in the question are holding costs: storage costs is self-explanatory, most likely being rent. Pilferage, scrap and obsolescence costs result from inventory depreciation, and insurance is paid to protect the firm's inventory from a hazard such as fire or robbery.