4 Posts
Hi,
What is a good way to estimate inventory and handling cost? This is for a small retailer of food items. I have sales information, the dollar amount of inventory on hand for every month, and some information on purchasing. What I am defining inventory and handling cost as are the following:
1. Inventory cost --> primarily electric and refrigeration. I would like to get this cost into some monthly form.
2. Handling cost --> labor cost to unload shipments to the retailer, organize the inventory, etc. Anything like this.
Any help is appreciated!
What is a good way to estimate inventory and handling cost? This is for a small retailer of food items. I have sales information, the dollar amount of inventory on hand for every month, and some information on purchasing. What I am defining inventory and handling cost as are the following:
1. Inventory cost --> primarily electric and refrigeration. I would like to get this cost into some monthly form.
2. Handling cost --> labor cost to unload shipments to the retailer, organize the inventory, etc. Anything like this.
Any help is appreciated!
1 Replies
457 Posts
Hello Joshua Maxton. Please see the response below from Dean Phillips:
https://connect.sme.org/discuss/viewtopic/41/909
https://connect.sme.org/discuss/viewtopic/41/909
Dean Phillips:
Make sure you factor in all aspects of inventory and handling costs.
Usually square footage is important and it drives “just in time” because square footage that is attributed to inventory can get rolled into overhead or inventory. If you have a separate forwarding facility, this cost can be an inventory cost or in some cases inventory is staged trailers before shipping out. This means more trailers than just those delivering product.
Cost of handling product can get expensive the more times you handle the product. If you have regional hubs or it has to be unloaded and loaded on another vehicle. This also leads to damage when you handle the product multiple times.
Transport via pallets and fork trucks, usually, also allocated in overhead but are a hidden cost in some cases of inventory management and handling charges.
Do some digging into the financials to figure how costs are categorized and in which bucket they are found.
Good Luck!
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