ECONOMICS

Detailed explanation-1: -Key Takeaways The costs associated with holding inventories in hand are referred to as carrying costs. Both costs are part of calculating economic order quantity. The carrying costs of the inventory are inversely connected to the ordering costs.

Detailed explanation-2: -What is Carrying Cost? Carrying cost is the amount that a business spends on holding inventory over a period of time. It is the cost of owning, storing, and keeping the items in stock.

Detailed explanation-3: -Ordering costs are the expenses your company incurs to purchase and receive the products it stocks in its inventory. These ordering costs can include shipping fees, unexpected transportation costs, inspection fees and other expenses necessary to acquire inventory products.

Detailed explanation-4: -Carrying costs are the various costs a business pays for holding inventory in stock. Examples of carrying costs include warehouse storage fees, taxes, insurance, employee costs, and opportunity costs.