Inventory cost calculation is an important part of doing business and understanding profitability. This process involves optimizing the cost of purchasing, maintaining and storing inventory to ensure efficient and effective use of resources. In other words, it’s about maximizing the value for each dollar you spend on keeping inventory. To do this, you need to understand your total costs and find ways to reduce them. That starts with knowing exactly how much money you spend to maintain and store each item in your inventory. Through strategic use of technology, careful tracking of items, and a thorough understanding of supplier agreements, you can effectively manage your overall inventory cost.