Calculating the Carrying Cost of Inventory

Author(s):

Mary Lu Harding, C.P.M., CPIM
Mary Lu Harding, C.P.M., CPIM, Principal, Harding & Associates, 802/453-5379; harding@sover.net

89th Annual International Conference Proceedings - 2004 - Philadelphia, PA

Abstract

We will explore how the carrying cost of inventory is determined, what factors are (or should be) included, and how to use this information to measure cost savings from inventory reduction. (Hint: If you want lower inventory levels, the higher the cost to carry, the better.)