Inventory Holding Costs Measurement: a multi-case study

Purpose: logisticians in all industries worldwide are frequently faced with the problem of measuring the total cost of holding inventories with simple and easy-to-use methodologies, as illustrated in this work, which put particular emphasis on the issue of inventory holding cost rate computation, when different kind of warehousing systems are applied. Design/methodology/approach: a multiple case study analysis is developed and supported by a methodological framework directly derived from the working group discussions and brainstorming activities, tacking into account two different field of application: one related to 5 companies with manual warehousing systems operating with traditional fork lift trucks; the other to 5 companies operating with Automated Storage/Retrieval Systems (AS/RS) to store inventories. Findings: the multi-case study helps understand how the holding cost parameter is currently computed by industrial managers and how much the difference between manual and automated/automatic warehousing systems has an impact on the inventory cost structure definition. The insights from the ten case studies provide evidence that the kind of storage system adopted inside the factory can impact the holding cost rate computation and allows to derive important considerations. Practical implications: the final aim of this work is to help industrial engineers and logisticians in correctly understanding the inventory costs involved in their systems and their cost structure. In addition, the multi-case analysis leads to considerations, to be applied in different industrial contexts. As other industrial applications are identified, they may be analyzed by using the presented methodology, and with aid from the data from this paper.