Supply Chain & Procurement worked example

Inventory Carrying Cost at 58% annual carrying rate: a worked example

Here is what the math looks like when conditions slip. We hold every other input steady and drop annual carrying rate to 58%, then walk the calculation through step by step. Estimate inventory carrying cost from inventory value, carrying rate, and storage burden.

The inputs for this scenario

  • Average units on hand: 100 units (held at the documented default)
  • Value per unit: 45 $ / unit (held at the documented default)
  • Annual carrying rate: 58 % (the input this scenario stresses; the baseline uses 80)
  • Fixed storage / handling cost: 250 $ (held at the documented default)

Working through the calculation

  • The calculation starts from the formula this tool documents: Weighted cost = quantity × rate × capture factor + fixed adjustment.
  • Total inventory carrying cost works out to 2,860 $ at these inputs, and this is the headline figure for the scenario.
  • Inventory carrying cost per unit works out to 28.6 $ / piece at these inputs.
  • Variable inventory carrying cost works out to 2,610 $ at these inputs.
  • Fixed inventory carrying cost adder works out to 250 $ at these inputs.

How this compares with the baseline

  • Against the tool's baseline example, where annual carrying rate sits at 80% and the headline result is 3,850 $, this scenario comes in 25.71% below the baseline at 2,860 $.
  • The practical read: the gap between this scenario and the baseline is entirely attributable to annual carrying rate, so recovering it is worth quantifying in dollars before considering equipment or staffing changes. The capture factor is an aggregate rate; it does not break out capital cost versus storage versus obsolescence, so two SKUs with very different spoilage or financing profiles can be misrepresented by one blended percentage.

Results at a glance

  • Total inventory carrying cost: 2,860 $ (headline result)
  • Inventory carrying cost per unit: 28.6 $ / piece
  • Variable inventory carrying cost: 2,610 $
  • Fixed inventory carrying cost adder: 250 $

Run it with your numbers

  • To rerun this with your own numbers, open the live Inventory Carrying Cost calculator, set annual carrying rate to your actual value, and adjust the remaining inputs to match your operation.

Last reviewed 2026-05-12.