Total Annual Inventory Cost Formula

Inventory costs are the costs of keeping stock of your goods expressed as a percentage of the inventory value. Capital, warehousing, taxes, depreciation are some of the costs included in the total annual inventory cost. This page shows the Total annual inventory cost formula to calculate the total annual inventory cost. This formula requires input values of demand, cost per unit, order quantity, cost of planning and annual holding for calculation.

Formula:

TC = (D x C) + ((Q / 2) x H) + ((D / Q) x S)


Where,

TC = Total Annual Inventory cost
D = Demand
C = Cost Per Unit
Q = Order Quantity
S = Cost of Planning Order/Setup Cost
H = Annual Holding and Storage Cost Per Unit of Inventory

Related Calculator:

The above Total annual inventory cost formula in this page is a simple formula that doesn't require any complicated mathematical operations for determination of cost.


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