Week 3-3: Establishing an Inventory Carrying Cost Percent

FromSupply Chain Logistics Management, Bowersox, Closs, Cooper, & Bowersox, p. 168:

You have been asked to establish an inventory carrying cost percent to supply your firm's supply chain planning initiatives.

• Identify and describe the carrying cost components.
• Review the various approaches to determine the opportunity cost component and provide the rationale for each.
• Recommend which approach you would use and why.
• Identify the implications of the opportunity cost decision on supply chain design decisions.