Holding costs, also known as inventory carrying costs, are the expenses associated with storing and managing inventory. This includes costs such as warehousing, insurance, taxes, obsolescence, and shrinkage. Holding costs are a critical part of the inventory management process and should be taken into account when determining the optimal inventory levels. They can have a significant impact on the profitability of a business, as they represent a direct cost to the company. As such, it is important to understand the various components of holding costs and how they affect the bottom line. The official business definition of holding costs is the expenses associated with storing and managing inventory, including costs such as warehousing, insurance, taxes, obsolescence, and shrinkage.
