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Carrying Cost Of Inventory

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Carrying Cost Of Inventory
The cost to a business of storing its inventory over a period of time. It includes taxes, insurance, the physical cost of storage, and opportunity cost. It does not include depreciation, if any. For example, if a business sells perishable goods and some of them spoil before they are sold, the carrying cost of inventory includes the costs associated with insuring and/or replacing the spoiled goods.


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