This is interest on loans and borrowings. For example, if you borrow $1 million to put into inventory, the interest rate will also be part of the cost of capital of the inventory.
Taxes
In Ukraine, taxation of inventories includes VAT, income tax, and issues related to Cost of securing financing accounting and depreciation depending on the type of inventory and its use in the business.
Storage cost
Supplies need to be stored somewhere. In the simplest case, this might be a stockpile of sand or coal in the open air. More complex supplies require protection from the elements, usually through a racking warehouse or storage facility.
Storage costs are the costs of land, premises, communications benefits before exams and maintenance, warehouse equipment and automation, insurance costs, depreciation, maintenance and repairs, and security and safety.
All of this is managed by staff who receive a salary and all appropriate social bonuses.
Processing cost
Every time someone touches your inventory package, it costs you at least a dollar. The handling cost includes Cost of securing financing transportation costs, warehouse movement, packaging, labeling, quality control, and other operations performed during storage.
Administrative costs
Costs for accounting and inventory management: second screens, active audience, and the future of television software, accounting and control of inventory quantities, document management, inventory.
Aging and disposal
With increasing volatility and shorter lifespans, products become obsolete faster. New ones appear and need to be updated. If there are still old products, you can sell them at a lower price, or throw them away, recycle them. In any case, even recycling costs money.
Damage and theft
Costs associated with the loss of goods or their damage during storage (spoiling of raw materials, short shelf life, etc.). And even if the stocks are completely gone, you still pay for them.
Reaction cost
The longer the supply chain, the more inventory, the more sluggish the clean email company is. Instead of nimbly dancing around competitors, inventory forces it to lag behind.
A positive example is the Spanish textile manufacturer Inditex. They manufacture products specifically for their ZARA brand in Portugal and Spain. This way, they can already deliver a copy of the latest couture model to their European stores while their competitors are still loading in Shanghai.