The present value of inventory carrying cost
Total inventory carrying cost
is often used for periodic internal reports and for decisions that are evaluated at the operating level on a before-tax basis.
Although the inventory planner may be very efficient at considering changes in traditional carrying costs
(such as warehouse space rental), changes in the company's income tax liability associted with holding inventory may escape his or her notice.
How can you propose to run a logistics network or develop and implement supply chain relationships without having inventory carrying cost
information at your fingertips?
If the seller grants credit without further credit investigation, it makes the $5,000 sale but bears three costs: the costs of production of $4,500 (equal to .90 times $5,000), the expected bad debt cost of $250 (equal to .05 times $5,000) and the expected carrying cost
of $163 (equal to 90/360 times .13 times $5,000).
Rising insurance costs, on the other hand, pushed up the value for the remaining components of carrying costs
from $197 billion in 2002 to $205 billion in 2003.
Insurers willing to embrace change and address the related organizational issues can reap such significant benefits as reducing the high cost of actuarial recruiting/turnover; introducing the newest technologies, methods and high-level thinking; eliminating capacity constraints and carrying costs
; and reducing actuarial human resources demands.
A comprehensive view of demand enables SSL to reduce operating expenses and inventory carrying costs
through more accurate management of production scheduling and inventory.
With a targeted market of $400 billion, the new on-line site will offer services for buying and selling basic, intermediate, specialty and fine chemicals, enabling participants to maximize utilization of resources and reduce inventory carrying costs
. The new company will offer participation to other qualified chemical companies around the world.
Gross margins declined from 19.7 percent in the second quarter last year to 16.7 percent because of increased inventory carrying costs
, according to Dean Rappaport, executive vice president and chief financial officer.
The carrying costs
of these assets should be deducted from income to arrive at residual income, a variant of ROI.
The rating reflects Fitch's expectations for stagnant revenue performance without revenue-raising measures, the city's inability to legally raise revenues independent of voter approval, adequate expenditure flexibility with elevated carrying costs
, an elevated long-term liability burden and very strong gap-closing ability.