Inventory Cost Calculator
Calculate your inventory costs including holding costs, carrying costs, and total inventory expenses. Understand how different factors affect your inventory management expenses.
Step 1: Inventory Details
Understanding Inventory Costs
Inventory costs include holding costs (storage, insurance, depreciation), order costs (processing, shipping), and shortage costs. Proper inventory management balances these expenses to optimize cash flow.
Step 2: Cost Factors
About Holding Costs
Holding costs typically range from 20% to 30% of inventory value annually. This includes storage, insurance, taxes, depreciation, and opportunity cost of capital. Lower holding costs can be achieved through better inventory management and turnover.
Inventory Cost Results
Total Annual Inventory Cost
Inventory Cost Comparison
| Inventory Strategy | Holding Cost Rate | Order Quantity | Total Annual Cost | Cost per Unit |
|---|
Inventory Cost Breakdown
Inventory Cost Formulas
Total Cost = Holding Cost + Order Cost = (Average Inventory × Holding Rate) + (Annual Demand ÷ Order Quantity × Order Cost)
Economic Order Quantity (EOQ) = √((2 × Annual Demand × Order Cost) ÷ (Unit Cost × Holding Rate))
Inventory costs are critical for business profitability. Optimizing order quantities and reducing holding costs can significantly improve cash flow and reduce expenses.
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