Inventory carrying costs, also known as holding costs, encompass all the expenses associated with holding and storing unsold goods within a business. These costs include various components such as warehousing expenses, salaries, transportation and handling fees, taxes, insurance, depreciation, shrinkage, and opportunity costs. They are incurred due to the need to maintain inventory in warehouses, distribution centers, or stores. Inventory carrying costs pose significant challenges in inventory management, as they encompass a wide range of expenses that impact a company’s profitability. Typically, these costs amount to approximately 20% to 30% of the total value of a company’s inventory.