Inventory cost, total inventory cost (TIC), total cost of inventory ownership, …: the nomenclature surrounding the terms of “inventory costs” can be in itself somewhat tricky, and what it covers tends to vary slightly depending on the sources and the business fields concerned.
That being said, it is not easy to establish a clean definition.
It is commonly accepted that the carrying costs alone represent generally 25% of inventory value on hand. They vary strongly depending on the business field, but they are always quite high. for a retailer the average of the goods bought to its suppliers during a year) on an annualized basis. Typically, inventory costs are described as a percentage of the inventory value (annual average inventory, i.e. Inventory carrying costs are the costs related to storing and maintaining its inventory over a certain period of time.
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