What are the cost of holding?

also referred to as transport costs, the cost of holding is any costs incurred by the reserves of the goods. The stored inventory can be raw materials waiting for use in production or finished goods waiting for sale and transport. There are several different types of holding with maintenance of any type of inventory.

Some forms of possession costs directly related to the physical equipment where the goods are located. For businesses that do not own their own compositions, the sources spent on the rental of the warehouse space qualify as the cost of possession. If the owner of the inventory owns warehouse equipment, expenditures such as taxes, public services, building and stock insurance, and wages and salaries paid to employees working in the warehouse can be correctly classified as the cost of possession.

In order to increase the profitability of business, there are some strategies that can help minimize holding in general, increasing net income obtained by societyin a given period. One of the most effective ways is to maintain the lowest possible stock. Note smaller inventory means that it is possible to rent a smaller and thus cheaper warehouse. Less employees are needed to supervise a smaller inventory. There is also a chance to reduce the amount of tools necessary to maintain the storage climate in the acceptable limit.

One of the greatest advantages of reducing the cost of possession is related to taxes. In many countries, there are taxes on the finished goods held in the inventory based on the total value of each unit of the unit that is held in the warehouse. By using production methods that allow the production of goods only a short time before the buyer is sent, the inventory is kept to a minimum, ie to a minimum, ie to have fewer items that are subject to.

The same approach can be used with the inventory of raw materials. Using a method that is known as the arrangement of the cycle, JE Possible to set points for each of the required materials. In essence, this approach allows the manufacturer to constantly maintain enough materials at hand to keep the production until the next ranking ranking is accepted. By avoiding the accumulation of a large material inventory that they can before use in production, the business is subject to less tax burden, allowing it to maintain more income generated from the sale of finished goods.