Holding Costs
Definition:
Holding costs, also known as carrying costs, are the costs associated with holding inventory. They include the cost of storage, insurance, taxes, and obsolescence.
Example:
Here are some examples of holding costs:
Storage costs: Storage costs include the cost of renting or leasing warehouse space, as well as the cost of utilities and labor.
Insurance costs: Insurance costs include the cost of insuring inventory against theft, fire, and other risks.
Taxes: Taxes include the cost of sales tax, property tax, and other taxes that are levied on inventory.
Obsolescence costs: Obsolescence costs include the cost of inventory that becomes outdated or unsellable.