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Inventory · Definition

Carrying Cost

The total cost of holding inventory over time.

Carrying cost (or holding cost) is everything it costs to keep stock on hand: capital tied up, storage, insurance, shrinkage, obsolescence and handling. It is usually expressed as a percentage of inventory value per year.

It is half of the trade-off in EOQ — the reason ordering too much at once is expensive.

Also called

  • holding cost

Related terms

Economic Order Quantity

EOQ

The order size that minimises the combined cost of ordering and holding stock.

Dead Stock

Inventory that is unlikely to ever sell.

Days Inventory Outstanding

DIO

The average number of days stock is held before it is sold.

More in Inventory

ABC Analysis Asset Tracking Available to Promise (ATP) Backorder Barcode Consignment Inventory Cycle Count Cycle Stock

Carrying Cost is not just a definition here

Inventory runs on this vocabulary every day in AWRA OpsHub — 44 of our 257 glossary terms describe things the platform actually does.

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