Monday, March 9, 2015

Carrying cost

The cost of keeping a product in our godown for a given number of days is an important
and real hidden cost which many among us fail to calculate.

To make it clear with a simple example, let us assume that a person has a
godown in which he can store say 100 given items and the rent for the godown
is Rs.30,000 per month.

In this example if a given item is kept for 30 days then the cost of keeping
that item is Rs.300.

Suppose an item worth 10,000 is kept in this godown for 40 days and then
sold for Rs.11,000 it goes without saying that out of the Rs.1,000 margin
a sum of Rs.400 was spent for just keeping the item till sold.

How many among us actually try to calculate this?

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