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Inventory Carrying Rate: This can best be explained by the example below....
1. Add up your annual Inventory Costs:
Example:
$800k = Storage
$400k = Handling
$600k = Obsolescence
$800k = Damage
$600k = Administrative
$200k = Loss (pilferage etc)
$3,400k Total 2. Divide the Inventory Costs by the Average Inventory Value:
Example:
$3,400k / $34,000k = 10% 3. Add up your:
9% = Opportunity Cost of Capital (the return you could reasonably expect if you used the money elsewhere)
4% = Insurance
6% = Taxes
19% 4. Add your percentages: 10% + 19% = 29%
Your Inventory Carrying Rate = 29% ---------------------------------------------------------------------------------------------------------------------------------- Inventory Carrying Costs: Inventory Carrying Cost = Inventory Carrying Rate (see above) X Average Inventory Value Example: $9,860,000 = 29% X $34,000,000 Inventory Carrying Rate: This can best be explained by the example below....
1. Add up your annual Inventory Costs:
Example:
$800k = Storage
$400k = Handling
$600k = Obsolescence
$800k = Damage
$600k = Administrative
$200k = Loss (pilferage etc)
$3,400k Total 2. Divide the Inventory Costs by the Average Inventory Value:
Example:
$3,400k / $34,000k = 10% 3. Add up your:
9% = Opportunity Cost of Capital (the return you could reasonably expect if you used the money elsewhere)
4% = Insurance
6% = Taxes
19% 4. Add your percentages: 10% + 19% = 29%
Your Inventory Carrying Rate = 29% ---------------------------------------------------------------------------------------------------------------------------------- Inventory Carrying Costs: Inventory Carrying Cost = Inventory Carrying Rate (see above) X Average Inventory Value Example: $9,860,000 = 29% X $34,000,000
Wiki User
β 15y ago
Wiki User
β 15y agowhat is the role of ordering cost and carrying cost in calculating the EOQ. what is the role of ordering cost and carrying cost in calculating the EOQ.
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Inventory carrying cost and cost of not having it?
Inventory carrying cost is that cost which is incurred by company to stock the inventory while cost for not having inventory means that cost which company has to bear due to non availability of inventory like loss of sales or good sales opportunity loss cost etc.
How does the cost of carrying inventory impact the traditional earnings statement of the enterprise?
Cost of carrying inventory has an inverse relationship with the earnings of the enterprise. Ergo, the more we lessen the carrying cost of the inventory, the more we can maximize our earnings. -Noli M. Olan
The real cost in the supply chain is end-to-end pipeline cost which includes?
U can say wt would be the right among the four options. Manufacturing cost of product, Cost of mark-downs and Inventory carrying costManufacturing cost of product, Cost of mark-downs, cost of lost of sales through stock outs and Inventory carrying costSelling cost of product, Cost of mark-downs and logistic costManufacturing cost of product, cost of lost of sales through stock outs and Inventory carrying costManufacturing cost of product, Cost of mark-downs and Inventory carrying costManufacturing cost of product, Cost of mark-downs, cost of lost of sales through stock outs and Inventory carrying costSelling cost of product, Cost of mark-downs and logistic costManufacturing cost of product, cost of lost of sales through stock outs and Inventory carrying costManufacturing cost of product, Cost of mark-downs and Inventory carrying costManufacturing cost of product, Cost of mark-downs, cost of lost of sales through stock outs and Inventory carrying costSelling cost of product, Cost of mark-downs and logistic costManufacturing cost of product, cost of lost of sales through stock outs and Inventory carrying costManufacturing cost of product, Cost of mark-downs and Inventory carrying costManufacturing cost of product, Cost of mark-downs, cost of lost of sales through stock outs and Inventory carrying costSelling cost of product, Cost of mark-downs and logistic costManufacturing cost of product, cost of lost of sales through stock outs and Inventory carrying cost
What is the explanation for the various costs involved in inventory?
carrying cost, ordering cost or setup cost are major cost involved in inventory
What is the difference between inventory holding cost vs carrying cost?
Actually there is no difference between Inventory holding cost and carrying cost. Its like, you will be able to hold the inventory only when you carry it. So whether you hold the inventory for one year or carry it for one year both are same
What are the various costs involved in an inventory problem?
Ordering cost carrying cost shortage cost
How do you calculate inventory cost?
Doing your mom
What is carrying cost in inventory?
Carrying costs include the cost of space, utilities (heating, air-conditioning, electric, etc.) insurance, interest or the cost of money, security...any marginal costs that you incur because of the inventory.
What are the various elements of costs associated with inventory decisions?
The cost which are associated with the inventory are: 1) Procurement cact 2) Ordering cost 3) Carrying cost
How do you calculate cost of placing an order in inventory management?
calculate the average cost of placing one order
Cost of good sold?
Cost of goods sold refer to the carrying value of goods sold during a particular period. The beginning inventory + inventory purchases â?? end inventory equals cost of goods sold.
How to calculate Inventory turnover period?
Generally inventory turnover period is calculated as: Sales/Inventory Also by, Cost of Goods Sold/ Average Inventory
