Definitions for carrying cost
This page provides all possible meanings and translations of the word carrying cost
carrying cost, carrying charge(noun)
the opportunity cost of unproductive assets; the expense incurred by ownership
In marketing, carrying cost refers to the total cost of holding inventory. This includes warehousing costs such as rent, utilities and salaries, financial costs such as opportunity cost, and inventory costs related to perishability, shrinkage and insurance. When there are no transaction costs for shipment, carrying costs are minimized when no excess inventory is held at all, as in a Just In Time production system. Excess inventory can be held for one of three reasons. Cycle stock is held based on the re-order point, and defines the inventory that must be held for production, sale or consumption during the time between re-order and delivery. Safety stock is held to account for variability, either upstream in supplier lead time, or downstream in customer demand. Psychic stock is held by consumer retailers to provide consumers with a perception of plenty.
Images & Illustrations of carrying cost
Find a translation for the carrying cost definition in other languages:
Select another language:
Discuss these carrying cost definitions with the community:
Word of the Day
Would you like us to send you a FREE new word definition delivered to your inbox daily?
Use the citation below to add this definition to your bibliography:
"carrying cost." Definitions.net. STANDS4 LLC, 2015. Web. 26 Nov. 2015. <http://www.definitions.net/definition/carrying cost>.