Storage Costs

Half of the logistics costs are costs of storage and costs of tied up capital in the storage. Storage is therefore a significant cost factor in organizations, so it can be developed to improve cost-effectiveness.

More than half of the cost elements cause personnel expenses, other expenses are divided between building and the plot of land, machinery, equipment and furniture as well as IT equipment and software expenses.

Inventory management involves a number of cost factors. They should be identified, so that costs can be reduced. Costs associated with storage are:

  • price of the raw material or product
  • inventory holding cost
  • supplement cost and shortage cost