Total Inventory Cost Calculator

Inventory Management Cost Calculator

Input Fields

Unit Price

P

$

Enter the price per unit of inventory

Annual Demand

D

Enter the total annual demand (units needed)

Order Quantity

Q

Enter the quantity ordered each time

Ordering Cost per Order

S

$

Enter the cost incurred each time an order is placed

Holding Cost per Unit

H

$

Enter the cost to hold one unit for one year

CalculateReset

Calculate automaticallyIf enabled, the result will update automatically when you change any value.

Your Results

Total Inventory Cost

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Total Inventory Cost Formula

$$\text{Total Inventory Cost} = \text{Ordering Cost} + \text{Holding Cost} + \text{Purchase Cost}$$

Where:

• $$Ordering Cost$$ = cost to place and receive orders
• $$Holding Cost$$ = cost to store and maintain inventory
• $$Purchase Cost$$ = total cost of purchasing inventory units

Total inventory cost combines ordering, holding, and purchasing expenses to reflect the full cost of managing inventory. Optimizing these components can significantly boost profitability. Businesses use this metric to make smarter purchasing decisions, plan inventory levels, and minimize storage and operational costs.

This formula often supports Economic Order Quantity (EOQ) models and supply chain optimization strategies.