Depreciation costs also Example A outsources storage paying a fee for each bin rack and pallet us for their inventory. These holding costs will qualify as inventory holding costs. In this case the inventory holding costs will be very easy to calculate as they will be the same as the holding costs paid to the PL . Different businesses handle their own warehousing and pay costs such as rent utilities insurance security labor and shelf structure themselves.
In this case these costs
Will also be consider inventory holding USA Phone Number List costs. However calculating holding costs in case is more complicat If for example only a certain amount of square footage in a warehouse is devot to storage while some space is us for offices break rooms etc. the rent for that space will not be consider part of the holding costs. Also read Example of an inventory correction journal and how to make it Detail holding cost calculation A more detail way to calculate inventory holding costs is through a formula that takes into account holding costs employees opportunities and depreciation. Overall the holding cost formula is express as a percentage of your total inventory value and looks like this Inventory holding cost holding cost.
Employee salary opportunity cost
Depreciation cost Total annual USA Whatsapp Number inventory value hHolding costs include all costs associat with physically storing your inventory such as warehousing or storage rent utilities and insurance. Employee costs primarily consist of salaries or wages for warehouse employees who maintain the building manage and audit inventory and fulfill orders. Opportunity costs are intangible and represent the costs of holding dead stock instead of other more profitable products. intangible are costs that arise as the value of your inventory naturally depreciates over time and as products become increasingly obsolete. Calculate those subtotals add them together and then divide that number by your total annual inventory value the combin average value of all the inventory you move in a year. This number express as a percentage is your inventory holding cost.
