Free online calculator
Inventory Carrying Cost Calculator
Estimate annual and average monthly carrying costs from inventory value and an annual carrying-rate assumption.. Includes a worked example, formula and practical FAQs.
Formula: Carrying cost = average inventory value × carrying rate
How to use the Inventory Carrying Cost Calculator
Estimate annual and average monthly carrying costs from inventory value and an annual carrying-rate assumption.
Formula
Annual cost = inventory value × annual rate / 100; average monthly cost = annual cost ÷ 12.
Worked example
$50,000 inventory at a 24% annual rate costs an estimated $12,000 per year, averaging $1,000 per month.
Interpretation and limitations
Use a representative average inventory value and a rate that reflects the intended cost scope, such as capital, storage, insurance and obsolescence. Avoid adding the same costs twice.
Inventory Carrying Cost questions
Is the monthly figure a cash-flow forecast?
No. It spreads an annual estimate evenly over 12 months. Actual invoices and inventory levels can vary.
Should inventory be valued at retail?
Use a consistent cost-based inventory value when applying a carrying-cost rate defined on cost.
Continue your calculation
For the next step, use the Economic Order Quantity Calculator or the Inventory Turnover Calculator. Review each tool’s input definitions before carrying a result into another calculation.
Frequently asked questions
Is this calculator free?
Yes. It runs in your browser and does not require an account.
How should I use the result?
Use the result as a planning estimate and verify business-critical decisions against your source records.