Total Annual Inventory Cost (TAIC) Calculation
Annual Inventory Cost Calculator
An online TC calculator to find out the inventory cost for the year.
Total Annual Inventory Cost Formula
TC = PD + HQ/2 + SD/Q
TC is the total annual inventory cost
P is the price per unit paid
D is the total number of units purchased in a year
H is the holding cost per unit per year
Q is the quantity ordered
S is the fixed cost per order
How to Caculate Total Yearly inventory cost
P is the price per unit paid-assume $5 per unit.
D is the total number of units purchased in a year-assume 3,500 units.
H is the holding cost per unit per year-assume $3 per unit per annum.
Q is the quantity ordered each time an order is placed-initially assume 350 gallons per order.
S is the fixed cost of each order-assume $15 per order.
Calculating TC with these values,
we get a total inventory cost of $18,175 for the year.