Carrying Inventory

Carrying inventory isn't an alternative term for driving it around on a forklift. It refers to the total cost of holding product that hasn't been sold yet. The figure includes warehousing costs such as rent, utilities and salaries, as well as financial costs such as opportunity and inventory costs.

The opportunity cost is often a key component in determining how to manage inventory. Companies need to remain responsive to customers' changing requirements. As such, slow introduction of improved items, and storing too much of outdated product can lead to problems.