Inventory Holding Cost Calculation is a business process used to determine the total cost of keeping a certain item in inventory. By looking at the cost of storing, managing, and maintaining an item, businesses can make informed decisions about how much of that product should be kept on hand. The process involves analyzing the costs associated with holding stock, such as storage fees, order processing fees, overhead costs, insurance premiums, and the opportunity cost of not being able to invest those funds elsewhere. By understanding these costs, businesses can calculate the optimal amount of inventory they need to hold while also ensuring they don’t lose out on potential opportunities to increase their profits.