Inventory Carrying Cost Calculator
Holding stock costs far more than the interest on the money tied up in it. Add up capital, space, handling, insurance, shrinkage and spoilage to see your real carrying cost, what it costs across every site, and what holding less stock would save.
- Six cost components
- Industry presets
- Sends rate to EOQ
- No sign-up
24 restaurants × $28K average stock = $672K of inventory on the shelves at any time.
Annual cost of holding it
$201,600
A carrying cost of 30% of inventory value a year.
Per site / year
$8,400
Every day
$552
01Cost components
30% totalBorrowing rate or return the cash could earn elsewhere. Typically 5–15%.
Rent, utilities and refrigeration for stockrooms. Typically 2–10%.
Staff time to put away, rotate and count stock. Typically 1–6%.
Cover on stock value, plus inventory taxes where they apply. Typically 0.5–3%.
Stock that disappears or is damaged. Typically 0.5–4%.
Stock that expires, goes off or is no longer used. Typically 1–15%.
02Where the money goes
Annual cost of each component across 24 restaurants.
- Spoilage & obsolescence9%$60.5K
- Cost of capital8%$53.8K
- Storage space6%$40.3K
- Handling & counting3%$20.2K
- Shrinkage & theft2.5%$16.8K
- Insurance & taxes1.5%$10.1K
03What less stock is worth
Typical results from par-level discipline and inter-site transfers are 10–25%
- Cash released once
- $100,800
- Saved every year
- $30,240
$201.6K a year · 30% carrying cost
Most of that cost sits in a few overstocked sites, and you can’t see which ones from a spreadsheet.
Bollard shows stock value, days of cover and spoilage by site and item, keeps par levels current, and moves surplus stock to sites that need it instead of buying more.
Method
The six parts of carrying cost
Capital is what the cash tied up in stock costs you or could earn elsewhere. Storage and handling are the space and staff time stock takes up. Insurance and taxes are charged on its value.
Shrinkage and spoilage are stock that never gets used. For food and medical supplies these are often the largest components.
Each is a percentage of average inventory value per year; their sum is your carrying cost rate.
From one site to every site
Carrying cost is spread across every stockroom, and a few overstocked sites account for most of it.
Bollard shows stock value, days of cover and waste by site and item, keeps par levels current from real usage, and transfers surplus between sites before anyone buys more.
- Stock value and days of cover by site
- Par levels updated from usage
- Inter-site transfers before new purchases
- Spoilage and write-offs tracked by item
Questions
Frequently asked
What is inventory carrying cost?+
The total annual cost of holding stock, expressed as a percentage of average inventory value. It includes the cost of the money tied up, the space it occupies, the labour to handle and count it, insurance and taxes, shrinkage, and stock that spoils or becomes obsolete.
What is a typical carrying cost percentage?+
Commonly 20 to 30 percent of inventory value a year, and higher for perishable goods. Many teams assume it is only their interest rate (5 to 10 percent), which makes holding extra stock look much cheaper than it is.
How is carrying cost calculated?+
Carrying cost % = cost of capital % + storage % + handling % + insurance and tax % + shrinkage % + spoilage and obsolescence %. Annual carrying cost = average inventory value × carrying cost %.
How does carrying cost affect order quantities?+
It is the holding cost in the economic order quantity formula. A higher carrying cost means smaller, more frequent orders are cheaper. Use the link in the calculator to send your rate straight into the EOQ calculator.
What does reducing inventory save?+
Two things: a one-off release of cash equal to the reduction in stock value, and a lower carrying cost every year after. Both are shown in the calculator.
Related tools
All tools- EOQ Calculator with Price BreaksEconomic order quantity with vendor price breaks, case-pack rounding and shelf-life limits.
- Expiry Risk & Inter-Site Transfer PlannerFind stock that will expire before it is used and suggest transfers to sites that need it.
- ABC-XYZ Analysis ToolSort a SKU list into Pareto classes and get a recommended stock policy for each group.
- Safety Stock & Reorder Point CalculatorGet reorder points and par levels from usage, lead-time variability and a target service level.
Free tools
Calculators and document builders for organisations that buy across many sites.
Runs in your browser
I. Spend & Leakage
II. Purchasing Documents
III. Inventory & Stock
IV. Governance & Controls
Free tools, no sign-up. Your figures are processed in your browser and are not uploaded to a server unless you ask us to email you a result. Results are estimates for planning and do not constitute financial, legal or tax advice.