Annual Inventory Holding Cost Formula
Examples of Holding Cost. That number when expressed as a percentage is your inventory holding cost. Operations Management Exercise Classes Order Quantity How Much The components of the formula that make up the total cost per order are the cost of holding inventory and the cost of ordering that inventory. . Calculate those subtotals add them together and then divide that sum by the total value of your annual inventory the combined average value of all inventory that you move in a year. Our CAGR formula divides 144 million the ending value by 100 million the beginning value and then raises it to 1 divided by 5 the number of periods. How Economic Order Quantity is calculated. Cost of Goods Sold 20000 5000 15000. Cost of Goods Sold 10000. In the subsequent step we subtract by 1 to get 76 as the implied CAGR. By Joannès Vermorel last revised January 2012 Service level inventory represents the expected probabil...