That purchase quantity is actually wasteful. Is buying in bulk to lower the unit price truly beneficial for your company, or is it a disadvantage?
This is a sheet for cost comparison focusing on storage costs (rates) used in inventory management to determine whether bulk purchasing has advantages or disadvantages. Please use it as one of your criteria for judgment.
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basic information
Regarding the storage cost rate (Carrying Cost %) The storage cost rate (Carrying Cost %) is the percentage that represents the storage cost calculated as unit price multiplied by the storage cost rate. Specifically, it indicates what percentage of the unit price corresponds to the storage cost per item over one year. So, what are storage costs? 1. Equipment costs and utility expenses required for storage (including construction costs of company warehouses or depreciation costs of warehouses) 2. Insurance premiums 3. Transportation costs 4. Inventory costs (including related labor costs) 5. Loss processing due to obsolescence, design changes leading to unused items, shrinkage, theft, and discrepancies with ledgers 6. Cost of capital (inventory requires investment of funds, which incurs costs for financing, including borrowing interest) There are calculation methods, but in reality, I think it is difficult to compute. Basically, when inventory becomes surplus, there are often cases where it is written off or disposed of after inventory checks. It is considered that the weight of waste costs as "the price of hoarding unnecessary items" is significant, and it seems reasonable to assume a storage cost rate of 30%.
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It is free of charge. Please feel free to download and use it.
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This is free software. It runs smoothly in Excel. Please enter values in the blue areas on the worksheet. If you have any questions, feel free to contact us via email. We will respond within two business days.
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