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This video discusses carrying costs of inventory.

Carrying costs are all the costs associated with holding inventory. Ordering costs include, but are not limited to:

-rent for a storage facility


-security (e.g., the wages of a security guard)

-shrinkage (e.g., the inventory becoming damaged, spoiled, stolen)


-foregone interest on working capital tied up in the inventory

The Just-in Time inventory system minimizes these costs by having the company carry little to no inventory.