How to calculate the cost of commodity inventory?

Commodity inventory cost = order cost+purchase cost+inventory holding cost+shortage cost+logistics cost.

Inventory cost is the total cost in the whole inventory process. Including:

(1) ordering cost.

(2) the purchase cost, that is, the cost of purchasing or producing the product, is related to the purchase volume or production volume.

(3) Inventory holding cost refers to the cost incurred for maintaining inventory, which usually refers to the cost incurred from warehousing to warehousing.

(4) Shortage cost.

(5) Logistics cost, that is, the cost of transporting goods from suppliers to warehouses and from warehouses to users, can also be merged into the above (1) and (2).

The cost of expanding data as inventory increases:

(1) Cost of capital. Inventory resources are valuable and occupy funds. These funds could have been used for other activities to create new value, and the inventory left these funds idle, leading to the loss of opportunities.

(2) the cost of storage space. To maintain inventory, it is necessary to build warehouses, equip them with equipment, and pay for heating, lighting, maintenance, warehousing and other expenses. This is the cost of maintaining storage space.

(3) The goods are deteriorated and obsolete. In the process of idleness, goods will deteriorate and become obsolete, such as metal rust, expired drugs, faded paint and fresh goods.

(4) Taxation and insurance.

Cost reduction with the increase of inventory:

(1) order fee. Ordering fee is related to ordering activities and receiving activities, including judging asking price, negotiation, order preparation, communication and receiving inspection. It is generally related to the order quantity, and has nothing to do with the order quantity at one time.

(2) Adjust the setup cost. Machining parts generally requires preparing drawings, processes and tools, adjusting machine tools and installing process equipment. The cost of these activities. If you spend one adjustment preparation fee, more parts will be processed, and the adjustment preparation fee allocated to each part will be less. But expanding the processing batch will increase the inventory.

(3) Purchase fee and processing fee. Large purchases or processing may lead to price discounts.

(4) production management fees. The processing batch is large, and the workload of arranging each batch of workpieces will be less.

(5) Shortage loss. Large batch, less shortage and less loss due to shortage.

Baidu Encyclopedia-Inventory Cost