Insurance costs (a % of the value of your stock).Annual unit cost of storage (in % or in value).However, there is much more to consider : This cost is often very underestimated because only cash costs and storage costs are taken into account. The cost of ownership of the Stock (SC) is really the cost of having a product immobilized in your warehouse, in your store or in your factory. In the example below, we arrive at 43€ per order. These tasks and hours – you can add or remove them depending on your service – must be multiplied by an hourly rate with all charges included (about 25€ in France) Inspection of the order at the warehouse / factory.Communication with the supplier by email.Approval of the order with your supervisor.The method I recommend is to try to estimate the number of hours spent at each process, i.e. This method is not optimal because generally, a person does not work only on orders. You can first take all the departments and people who work on the order placement and divide the total cost by the number of orders you place each year. There are different methods of calculation. This is a unit order, so all the fixed costs generated for each order are considered. The cost of placing an order (CO) is a little more complex because it includes all the costs related to placing each order.
The size is important here because each item will have a different volume. In this example, we will take 12,000 thousand pairs of Nike shoes size 43. You have a particular product (for example a pair of Nike shoes size 43), and you take the quantity planned over the desired period (usually 12 months).
Example 1: Demand (D), it is the easiest parameter to calculate.
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