Inventory Carrying Cost Calculator

About this calculator

Inventory carrying cost (also called holding cost) is the total expense of keeping stock in a warehouse before it sells — capital tied up in the goods, storage and warehousing space, insurance, taxes, and shrinkage or obsolescence as items age or go out of style. Supply chain planners typically express it as a percentage of the average inventory value, and industry benchmarks commonly put that rate in the 20 to 30 percent per year range once every component is added up.

This calculator multiplies your average inventory value by the annual carrying cost rate to get the yearly holding cost, then divides by twelve for a monthly figure. It is the cost side of the classic buy-more-vs-buy-less tradeoff: ordering in larger batches lowers ordering frequency but raises the carrying cost of the extra stock sitting on the shelf, which is exactly the balance the Economic Order Quantity (EOQ) formula is built to solve.