Analyze capital, storage, service, and risk costs clearly. Compare scenarios and support better replenishment decisions. Get fast results, exports, charts, and practical guidance today.
Choose direct inventory units or derive average inventory from operational stock values. The result appears above this form after submission.
Average inventory units can come from two methods.
Direct method: Average Inventory Units = Entered Average Inventory Units
Derived method: Average Inventory Units = (Order Quantity ÷ 2) + Safety Stock + Reserve Stock
Average inventory value: Average Inventory Units × Unit Cost
Total holding rate: Capital Rate + Storage Rate + Service Rate + Risk Rate
Rate-based holding cost: Average Inventory Value × Total Holding Rate
Total annual holding cost: Rate-Based Holding Cost + (Average Inventory Units × Variable Holding Cost Per Unit) + Fixed Warehouse Overhead
Inventory turns: Annual Demand ÷ Average Inventory Units
Days on hand: 365 ÷ Inventory Turns
| Item | Example Value |
|---|---|
| Average inventory units | 600 |
| Unit cost | $25.00 |
| Annual demand | 7,200 units |
| Capital rate | 10% |
| Storage rate | 6% |
| Service rate | 3% |
| Risk rate | 4% |
| Variable holding cost per unit | $2.50 |
| Fixed warehouse overhead | $1,200.00 |
| Average inventory value | $15,000.00 |
| Total annual holding cost | $6,150.00 |
| Monthly holding cost | $512.50 |
Annual holding cost is the yearly expense of keeping inventory in stock. It usually includes capital cost, storage, insurance, shrinkage, obsolescence, and warehouse overhead.
Ecommerce sellers often hold many products across seasons and campaigns. This calculator helps estimate stock carrying costs before pricing, purchasing, and replenishment decisions are finalized.
Use realistic annual percentages for capital, storage, service, and risk. These can come from accounting records, warehouse contracts, insurance data, and shrinkage history.
Use derived mode when you know order quantity, safety stock, and reserve stock, but do not track average inventory directly. It gives a practical estimate for planning.
It shows annual holding cost relative to average inventory value. A higher percentage means inventory is more expensive to keep in stock each year.
Inventory turns reveal how quickly stock moves. Faster turns often reduce holding pressure, while slow turns increase warehouse time and total carrying expense.
Yes. You can use it for a single SKU, a product family, or a whole category. Just keep your inputs consistent with the scope you are analyzing.
Reduce excess stock, improve demand forecasting, shorten lead times, remove slow movers, optimize order quantities, and negotiate better warehousing or insurance terms.
Important Note: All the Calculators listed in this site are for educational purpose only and we do not guarentee the accuracy of results. Please do consult with other sources as well.