Inventory Costs Worksheet
Warehousing your own inventory can add up to 41% a year to the purchase price of materials.
To find out how much extra you may be paying, fill in the box below with the average value of your inventory. Then talk to an EMJ representative about how much you could save by ordering just what you need, when you need it. Click here to find your nearest emj representative.
Inventory Value
Housing Costs
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| To house your inventory, you must pay for such things as racks, equipment to move it, maintainance, depreciations, lighting and heating. | | | | Additional Costs: 3.6% - 9.0% |
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| | | | | Building Depreciation (2.4%) | $0 | | Operating Costs (3.0%) | $0 | | Taxes (0.8%) | $0 | | Insurance (0.6%) | $0 | | Total Costs (6.8%) | $0 |
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Capital Costs
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| Whether you borrow from the bank, or pay out of cash flow, you must pay for more than just the cost of materials. There are also taxes and insurance on the inventory, and you run the risk of material becoming obsolete. | | | | Additional Costs: 6.6% - 16.5% |
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| | | | | Material Costs (9.0%) | $0 | | Inventory Taxes (0.6%) | $0 | | Inventory Insurance (0.6%) | $0 | | Material Obsolescence (1.5%) | $0 | | Total Costs (11.7%) | $0 |
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Equipment Costs
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| It's likely you must process the materials before they're ready for production. That takes saws and possibly other special equipment. | | | | Additional Costs: 1.3% - 3.3% |
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| | | | | Preproduction Processing Equipment Depreciation (0.6%) | $0 | | Material Handling Equipment Depreciation (0.4%) | $0 | | Electrical Power and Special Supplies (1.0%) | $0 | | Servicing and Repair (0.5%) | $0 | | Total Costs (2.5%) | $0 |
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Scrap Costs
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| When materials end up in your scrap bin it really costs you. Even if you sell to a scrap dealer, you only realize a small fraction of the actual purchase price. | | | | Additional Costs: 4.5% - 11.2% |
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| | | | | Average Scrap Cost (8.5%) | $0 | | Total Costs (8.5%) | $0 |
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Manpower Costs
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| To warehouse your own inventory, you must have people to receive and store it, people to operate fork lifts and preprocessing equipment, people to collect scrap, and clerical personnel to plan, track and monitor the inventory. | | | | Additional Costs: 5.8% - 14.5% |
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| | | | | Receiving & Stocking Labor (2.0%) | $0 | | Moving Labor (2.4%) | $0 | | Preproduction Labor (7.9%) | $0 | | Total Costs (12.3%) | $0 |
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