22,000 is the example result. Read it using the units and relationship stated below.
Inventory Carrying Cost uses average inventory value, carrying cost (%).
Balancing availability against cash tied up in stock
For inventory carrying cost, the relationship is Result = [Average inventory value] × [Carrying cost (%)] ÷ 100. The amount depends on the supplied average inventory value, carrying cost (%), rather than a live market price or a value imported from another record. An inventory decision must connect demand, lead time and the cost of holding goods. Buying more can reduce ordering frequency but ties up cash and storage. A stock ratio is useful only when its demand period is clear.
What the model includes
Result = [Average inventory value] × [Carrying cost (%)] ÷ 100 Use purchase and sales records from a comparable period. Separate regular consumption from a promotion or one-off order; otherwise a reorder assumption can carry a temporary spike into the next purchasing cycle. Check supplier pack sizes, minimum quantities and delivery reliability before turning a calculated amount into an order. The model does not measure deterioration, seasonality or the cost of a stockout unless those inputs are present.
Example with the supplied inputs
Average inventory value: 100000; Carrying cost (%): 22. Result: 22,000. The values are illustrative.
Compare one changed input
Average inventory value changes from 100000 to 110000. The result becomes 24,200. All other inputs remain fixed.
Calculation rule
Result = [Average inventory value] × [Carrying cost (%)] ÷ 100
Inputs and output
| Input | Example value | Entry convention |
|---|---|---|
| Average inventory value | 100000 | Use the source quantity represented by average inventory value. Keep the counted population fixed and avoid mixing a unit value with a period total. |
| Carrying cost (%) | 22 | Enter carrying cost (%) on the percentage scale used in the formula (20 means 20%, not 0.20). Keep its base and reporting period consistent with the other inputs. |
Output: 22,000 is the example result. Read it using the units and relationship stated below. Use the formula to distinguish a cash amount, count, percentage or ratio.
How to use the page
Collect the inputs
Gather Average inventory value, Carrying cost (%). Use one period and the units shown in the form.
Run the calculation
Enter the values and select the action. The calculation rule above explains how the inputs produce the result.
Compare a scenario
Change Average inventory value on its own, keeping the other inputs fixed. Read both results before changing another assumption.
Worked example
With the example inputs listed above, the result is 22,000.
Change Average inventory value from 100000 to 110000 while keeping every other value fixed. The result becomes 24,200. This comparison isolates that input; it does not forecast how other variables will respond.
Check the stated formula, units and limits before using the result in a decision.
Keep the displayed formula, input units and model scope with the result. Corrections or questions can be sent through the request section on this page.
Content updated: October 11, 2026