Quick answer
Carrying cost is average inventory value times a carrying rate that includes capital, obsolescence, handling, and shrink. Many teams use 15–25% as a planning band when precision data is missing.
Overview
Carrying cost helps justify min/max tuning and vendor-managed inventory experiments.
It is not a replacement for a full finance model.
How to use this tool
Enter average inventory value on hand (warehouse + vans, if applicable) and an annual carrying rate percentage.
Calculator
$
%
Annual carrying cost
$36,000
Limitations
Single rate assumption; does not split slow movers vs fast movers.
FAQ
- What carrying rate should I use?
- If unknown, start at 20% and sensitivity-test 15% and 25% with finance.
Model this in Equipify
Connect assets, PM schedules, work orders, and billing so these metrics become live—not spreadsheet snapshots.