This total inventory cost calculator sums the ordering, holding, and purchase costs of inventory over a period. Enter demand, order quantity, and the cost figures above.
Formula
TIC = (D ÷ Q) × S + (Q ÷ 2) × H + P × D
- D — annual demand, Q — order size, S — order cost, H — holding cost/unit, P — unit price
Example
D=1000, Q=100, S=$50, H=$5, P=$20: TIC = 500 + 250 + 20,000 = $20,750.
Good to know
These results are estimates for educational purposes only and are not financial advice. Rates, fees, and terms vary — confirm figures with a licensed professional before making decisions. Last updated: August 2026.
Frequently Asked Questions
How do I calculate total inventory cost?
Add ordering cost (D/Q times S), holding cost (Q/2 times H), and purchase cost (price times demand).
What order size minimizes cost?
The economic order quantity (EOQ) balances ordering and holding costs to minimize the total.
Does purchase cost affect the order size?
Not directly unless there are quantity discounts; the EOQ depends on ordering and holding costs.