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Inventory Holding Cost

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Published on

Jul 18, 2025

Warehousing

Inventory Holding Cost

Cost of storing unsold inventory over time.

Inventory holding cost includes all expenses associated with storing goods—such as rent, utilities, depreciation, insurance, and capital cost. Holding cost is a critical consideration in calculating optimal reorder quantities. For example, if it costs £1 per unit per month to store 10,000 units, the business may want to increase turnover or reduce stock levels to save costs.

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