Costs and Benefits of Holding Inventory Assignment Help

Costs and Benefits of Holding Inventory Assignment Help
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Costs and Benefits of Holding Inventory Assignment Help

If you are looking for the Costs and Benefits of Holding Inventory assignment help, we are here to help you. At BookMyEssay, you will get all sorts of professional guidance from our best assignment helpers and state-of-the-art supporting team. Inventory management is mainly about stipulating the volume or quantity and percentage of stocked goods. The inherent purpose is to keep an incessant supply of goods in the stocked points so that the market gets the product in sufficient quantities. Our writers in this discipline are well accustomed on all topics of Costs and benefits of holding inventories. So, never feel helpless if you have any issue in writing an impressive assignment in this discipline.

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Cost of Holding Inventory

While calculating the cost of holding inventory, the following costs are included:

  • The total cost of the stock and other sums directly linked with the inventory like capital and opportunity cost of money tied up with the inventory.
  • Cost of the physical space engaged in preserving the inventory which includes depreciation, rent, taxes, utility costs, insurance, etc.
  • Cost of handling the items, deterioration cost, cost of damaged goods, and obsolescence cost.

In most of the accounting systems, all the above-mentioned costs are calculated for the whole year and then expressed in percentage on the cost of inventory items. For example, the holding cost maybe 25% which means, if the company has $400,000 as inventory cost, the inventory holding cost is $100,000 for the whole year.

The holding cost of inventory depends on many aspects including the perish ability of the product, availability of stock place, cost of transportation, and demand for the product in the market. If a company has a lump-sum investable fund, large storage space, no other option of investment, and the product is not perishable in nature, then the cost of inventory holding will be low for the company.

Benefits of Holding Inventory

There are various benefits of holding inventory:

  • Holding inventory helps in incessant supply of the products leading to a minimum or no loss of sales.
  • Holding inventory reduces the shortage of
  • If it is possible to hold raw materials on a large volume, the suppliers are pleased to offer discounts.
  • In inventory management, order cost takes time and money. When the inventory is good enough, a reseller will be able to place large order thereby reducing the order cost to a certain amount which is not otherwise possible.
  • Large inventory enables optimum output thereby reducing production cost. In this situation, overhead expenses reduce drastically.

Benefits of holding inventory are really enormous; however, the company needs to calculate what should be the optimum level of inventory and what allied factors may incur a loss.

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