Inventory types; Raw materials, Goods in process (stuff being built), and finished goods (inventory-hold). Raw materials and goods in process should eventually end up being finished goods so they are ok. However, it is important to reduce inventory-hold because products not sold that are stocked in the shelves or warehouses are costing money. Goods unsold equal capital that is just lying around.
Without doing any research, I would say:1. Cost of the inventory itself to include shipping.2. Warehousing costs - the cost of the warehouse building3. Theft and damage and lost of valueFrom another site:1. Start up costs2. Cost of materials and the warehouse equipment3. Cost of lost production if inventory runs outWarehousing does not generate income, it is an expense.If a company can drop ship a product, they wouldn t have to warehouse the product before sale. Auto manufacturers use a just-in-time ordering system where the parts and assemblies that are needed are received at the time they are needed in the assembly process.
Cost of funds (interest if borrowed funds) to buy the inventory. Cost to store the inventory (if any). Cost to manage the inventory (if any) in terms of people/payroll needed to manage it, money needed to get the inventory from supplier to holder, etc. Cost of the inventory itself.
