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Total Inventory Cost

Total Inventory cost is the total cost associated with ordering and carrying inventory, not including the actual cost of the inventory itself. It is important for companies to understand what factors influence the total cost they pay, so as to be able to minimize it. Use the total inventory cost calculator below to solve the formula.

Total Inventory Cost Definition

Total Inventory Cost is the sum of the carrying cost and the ordering cost of inventory.

Variables

C=Carrying cost per unit per year
Q=Quantity of each order            
F=Fixed cost per order
D=Demand in units per year

 


Total Inventory Cost Formula

 

 





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