Finance Tools
Inventory Cost Inflation Carrying Cost Calculator
Estimate how inventory cost inflation increases annual inventory carrying costs (capital, storage, insurance, shrink).
Estimate how cost inflation increases annual inventory carrying costs (capital, storage, insurance, shrink) by raising the average inventory value.
Average units held in inventory.
Landed/fully-loaded unit cost, if possible.
Assumes the average inventory cost rises by this percentage.
Typical carrying cost often ranges ~15–30% depending on business.
Inventory value
Before: $400,000
After: $448,000
Change: +$48,000
Annual carrying cost
Before: $88,000
After: $98,560
Added carrying cost: +$10,560
Inventory carrying cost is typically modeled as a percent of average inventory value. Cost inflation increases inventory value, which raises carrying costs.
How it works
- Average inventory value increases with cost inflation.
- Annual carrying cost ≈ average inventory value × carrying cost rate.
- Added carrying cost = after − before.
FAQ
What’s included in “carrying cost rate”?
Common components: cost of capital/interest, warehousing, insurance, shrink/obsolescence, handling.
Is inflation applied to all inventory?
This assumes your average inventory value rises proportionally. If only some inputs inflate, use a weighted inflation %.
How to use this inventory cost inflation carrying cost calculator
- Choose input mode: inventory units or inventory value.
- Enter current unit cost (or current inventory value) and cost increase (%).
- Enter annual carrying cost rate (%).
- See annual carrying cost before vs after and the added carrying cost.
Example
Average inventory is 50,000 units at $8/unit. Costs rise 12%. Carrying cost rate is 22%/year.
- Inventory value before = 50,000 × 8 = 400,000
- Inventory value after = 50,000 × 8.96 = 448,000
- Carrying cost before = 400,000 × 22% = 88,000
- Carrying cost after = 448,000 × 22% = 98,560
- Added carrying cost = 10,560
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