5,500 is the example result. Read it using the units and relationship stated below.
Overstock Cost uses excess units, unit cost, holding cost (%).
Balancing availability against cash tied up in stock
For overstock cost, the relationship is Result = [Excess units] × [Unit cost] × [Holding cost (%)] ÷ 100. The amount depends on the supplied excess units, unit 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 = [Excess units] × [Unit cost] × [Holding 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
Excess units: 1000; Unit cost: 25; Holding cost (%): 22. Result: 5,500. The values are illustrative.
Compare one changed input
Excess units changes from 1000 to 1100. The result becomes 6,050. All other inputs remain fixed.
Calculation rule
Result = [Excess units] × [Unit cost] × [Holding cost (%)] ÷ 100
Inputs and output
| Input | Example value | Entry convention |
|---|---|---|
| Excess units | 1000 | Use the source quantity represented by excess units. Keep the counted population fixed and avoid mixing a unit value with a period total. |
| Unit cost | 25 | Use unit cost on the currency and period basis shown by the formula. Keep gross amounts, net amounts and unit amounts distinct; the page does not fetch a price or exchange rate. |
| Holding cost (%) | 22 | Enter holding 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: 5,500 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 Excess units, Unit cost, Holding 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 Excess units 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 5,500.
Change Excess units from 1000 to 1100 while keeping every other value fixed. The result becomes 6,050. 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