Inputs
Summary
Scenario comparison
Cost breakdown
Formula & Definitions
Core formula: Total Carrying Cost = Average Inventory Value × Holding Cost Rate. For monthly reporting the tool divides the annual holding rate by 12 when Time period = Monthly.
Input definitions
- Average inventory value: the average monetary value of inventory held during the period (€ or $).
- Average units on hand: number of units on average; used to compute carrying cost per unit (optional).
- Annual holding cost rate (%): total holding cost expressed as a percent of inventory value (includes capital, storage, insurance, obsolescence).
- Time period: choose Annual or Monthly. Monthly reporting scales the annual rate accordingly.
- Storage / Capital / Insurance / Obsolescence (%): share of the holding cost allocated to each component. These percentages are used to split the total carrying cost into the breakdown chart.
- What-if: Inventory reduction (%): a slider to simulate reducing average inventory value and compare resulting carrying costs.
Summary values explained
- Total carrying cost: the monetary cost of holding inventory for the chosen period (annual or monthly), calculated by the core formula.
- Carrying cost per unit: the total carrying cost divided by average units on hand. Shown as N/A if average units is zero or not provided.
- Carrying cost (% of inventory value): total carrying cost expressed as a percentage of the average inventory value (useful for benchmarking).
- Cost breakdown: allocation of the total carrying cost into storage, capital, insurance and obsolescence according to the percentage shares you provided.
- Scenario comparison: shows the baseline total and the total after the percentage inventory reduction selected by the slider, plus absolute and percent change.
Frequently Asked Questions
This is the average monetary value of inventory held during the period. Use your typical balance or calculate the average of opening and closing inventory values.
The holding cost rate expresses total annual carrying cost as a percentage of inventory value. A higher rate increases the calculated carrying cost proportionally.
The slider simulates reducing average inventory value by the selected percentage and shows the resulting change in total carrying cost and breakdown.
Component percentages (storage, capital, insurance, obsolescence) allocate the total carrying cost into a meaningful breakdown. They are normalized internally so they can sum to any value.
No. Calculations run locally in your browser. Nothing is transmitted or stored by this page unless you explicitly export or copy values.
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