Inventory optimization

Carrying cost

In marketing, carrying cost, carrying cost of inventory or holding cost refers to the total cost of holding inventory. This includes warehousing costs such as rent, utilities and salaries, financial costs such as opportunity cost, and inventory costs related to perishability, shrinkage (leakage) and insurance. Carrying cost also includes the opportunity cost of reduced responsiveness to customers' changing requirements, slowed introduction of improved items, and the inventory's value and direct expenses, since that money could be used for other purposes. When there are no transaction costs for shipment, carrying costs are minimized when no excess inventory is held at all, as in a Just In Time production system. Excess inventory can be held for one of three reasons. Cycle stock is held based on the re-order point, and defines the inventory that must be held for production, sale or consumption during the time between re-order and delivery. Safety stock is held to account for variability, either upstream in supplier lead time, or downstream in customer demand. Physical stock is held by consumer retailers to provide consumers with a perception of plenty. Carrying costs typically range between 20 and 30% of a company's inventory value. (Wikipedia).

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This video explains how to setup and solve a linear inequality in one variable to solve an application. http://mathispower4u.com

From playlist Linear Inequalities Applications

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In this video I talk about what a reasonable upper limit is for most people when it comes to cars. How much should you spend on a car? I answer this question and share my thoughts.

From playlist Finance

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Ex: Model the Cost of a Rental Truck Using A Linear Function (m and b given)

This video explains how to model the cost of a rental truck using a linear function. The function is then used to make predictions. The slope and initial amount are given. http://mathispower4u.com

From playlist Applications:  Solving Linear Equations in Two Variables 

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Ex: Linear Equation Application (Cost of a Rental Car)

This video provides an example of how to determine how far you can drive a rental car with a specific amount of money to cover the fixed cost and mileage cost. Complete Video Library at http://www.mathispower4u.com Search by Topic at http://www.mathispower4u.wordpress.com

From playlist Applications:  Solving Linear Equations in Two Variables 

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From playlist ALGEBRA CH 32 APPLICATIONS OF LINEAR EQUATIONS

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SAT Prep: Test 6 Section 9 Part 4

Problems 15-16 on page 747

From playlist SAT Preparation

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SAT math Q32 calculator allowed #shorts

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From playlist #shorts mathematicsonline

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Commodity cost of carry: Investment commodities (FRM T3-14)

[Here is my xls https://trtl.bz/2HoKR5d] The cost of carry model returns a theoretical forward price, which is based on the NET cost of ownership. Discuss this video here in our FRM forum: https://trtl.bz/2JJZi8M.

From playlist Financial Markets and Products: Intro to Derivatives (FRM Topic 3, Hull Ch 1-7)

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Commodity Cost of Carry: Storage Cost (FRM T3-15)

[Here is my XLS https://trtl.bz/2l5IV8G] In the cost of carry (COC) model, storage cost is treated like negative income. If we reduce the total storage cost over the life of the futures contract, given by (U), then the theoretical futures price is given by F(0) = [S(0) + U]*exp(rT). If we

From playlist Financial Markets and Products: Intro to Derivatives (FRM Topic 3, Hull Ch 1-7)

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From playlist Derivatives: Commodity Futures

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FRM: Cost of carry model to price forwards & futures

The cost of carry model is universally helpful. It summarizes the link between the spot price and the (theoretical) futures price for a commodity. For more financial risk videos visit our website! http://www.bionicturtle.com

From playlist Derivatives: Commodity Futures

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Cost of Carry: convenience yield (FRM T3-16)

[here is my xls https://trtl.bz/2tl3AJC] The convenience yield an intangible benefit of commodity ownership. It is derived from (explained by) the observed forward/futures price. Discuss this video here in our FRM forum: https://trtl.bz/2EeMun5.

From playlist Financial Markets and Products: Intro to Derivatives (FRM Topic 3, Hull Ch 1-7)

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Commodity (eg, gold) lease rate (FRM T3-18)

[my xls is here at https://trtl.bz/2NozX3D] The least rate is the borrowing rate a commodity owner charges if (s)he lends the commodity. The least rate is equal to the convenience yield minus the storage cost: L = y - u. Because if the commodity owner LENDS the commodity, (s)he forgoes sto

From playlist Financial Markets and Products: Intro to Derivatives (FRM Topic 3, Hull Ch 1-7)

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Contango versus normal backwardation (FRM T3-20)

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From playlist Financial Markets and Products: Intro to Derivatives (FRM Topic 3, Hull Ch 1-7)

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Interest rate parity applies cost of carry model (FRM T3-21)

[my xls is here https://trtl.bz/2uIVV9R] Interest rate parity applies the cost of carry (COC) model to enforce an equilibrium (indifference) between two choices: 1. translate the 1,000 EURs immediately at the spot FX rate, and subsequently grow them at the USD risk-free rate for two years;

From playlist Financial Markets and Products: Intro to Derivatives (FRM Topic 3, Hull Ch 1-7)

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Theory of normal backwardation (FRM T3-17)

[here is my xls https://trtl.bz/2tBWdOY] If the commodity has positive beta, then the theoretical futures price is less than the expected future spot price: F(0) is less than E[S(t)]. Discuss this video here in our FRM forum: https://trtl.bz/2LP0Ctv.

From playlist Financial Markets and Products: Intro to Derivatives (FRM Topic 3, Hull Ch 1-7)

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From playlist Adventure Van

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From playlist Screeps

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From playlist Algebra 1 Test 3

Related pages

Inventory | Risk | Weighted average cost of capital | Exchange rate | Safety stock | Inventory turnover | Economic order quantity