3 A B C D E F G H I J K L M N O P Q R S T U V W Y

Inventory carrying cost

Inventory carrying cost is the cost of owning inventory and having it available. Costs depend on the inventory’s value, and also on storage space, obsolescence, spoilage, taxes and insurance.

Higher inventory levels drive higher inventory carrying costs, but can also improve customer service (product available to ship today) and reduce risk of disruption due to events such as supplier delays or the breakdown of critical machine.