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.
References in periodicals archive ?
There are other values added to inventory costs such as the so-called carrying costs of inventory These are purposely not considered for two reasons: The dominant components of balance sheet inventory value are material and labor costs, and whether these carrying costs behave as suggested is highly questionable.
We've seen companies go through their sales forecast process step by step, including the connection to specific manufacturing requirements and inventory purchases by product, with an emphasis on reducing the carrying costs of inventory.
In 1980, logistics costs--including the carrying costs of inventory, plus warehousing and transportation costs--were about 17 percent of GDP.
Logistechs' productivity solutions help airlines manage their parts inventory more efficiently, lowering the carrying costs of inventory and improving overall spare parts availability.