Inventory Carrying Cost Calculator
Estimate annual holding cost from average stock value, capital cost, storage, insurance and obsolescence.
Annual carrying costExample$11,000
- Carrying cost rate
- 22%
- Average monthly carrying cost
- $916.67
How to calculate inventory carrying cost
Annual carrying cost = average inventory × capital rate + storage + insurance + losses
All expense inputs are annual. Do not double-count losses or financing costs already included elsewhere. Purchase cost itself is not an annual holding expense.
Worked example
An illustrative scenario. “Reset to example” restores it in the calculator.
- Average inventory at cost
- $50,000
- Annual capital cost rate
- 8%
- Annual storage costs
- $4,000
- Annual insurance and inventory charges
- $1,000
- Annual obsolescence and losses
- $2,000
Annual carrying cost: $11,000
Inventory Carrying Cost FAQ
Which inventory value should I use?
Use average inventory valued at acquisition cost across the year, ideally from monthly observations when stock is seasonal.