HOLDING COSTS

Cost of storing inventory or assets that remain unsold. It’s a major component of supply chain management, as businesses need to determine how much of a product to keep in stock. This represents an opportunity cost, as the presence of the goods means that they are not being sold while that money could be deployed elsewhere. In addition, holding costs include the costs of goods being damaged or spoiled over time and the general costs, such as space, labor and other direct expenses.

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