Logistics calculators

Logistics is the discipline of moving and storing goods at the lowest total cost without breaking service levels. The four largest costs in the function — inventory holding, ordering, warehousing, and shipping — are deeply interconnected: optimising one in isolation usually inflates another. Holding less inventory cuts holding cost but raises order frequency and shipping cost; ordering in larger batches cuts ordering cost but inflates holding cost.

These calculators model each of the four costs and the trade-offs between them. Inventory-holding-cost computes the true annual cost of carrying stock. Economic order quantity (EOQ) finds the order size that minimises combined holding and ordering cost. Warehouse-cost breaks down the per-unit cost of storage. Shipping comparison and landed cost reveal what an item actually costs after customs, duties, and freight.

All maths uses 20-digit decimal precision. We make no jurisdiction-specific assumptions about duty rates, tariff schedules, or warehousing labour costs — you supply the local numbers. The output is the kind of cost-stack analysis a freight forwarder or warehouse manager would build, without the consultancy invoice.

Inventory holding costs

Holding inventory is not free. The cost of carrying stock includes the capital tied up (opportunity cost of cash), warehouse space, insurance, taxes, shrinkage (theft, damage, spoilage), and obsolescence. Combined, inventory holding cost is typically 18–35% of inventory value per year — and many small businesses underestimate it by half.

The largest component for most businesses is the cost of capital. A business holding $200,000 in inventory at a 10% cost of capital is foregoing $20,000/year in opportunity cost — money that could be earning a return elsewhere or paying down debt. The inventory-holding-cost calculator quantifies the full stack: capital, space, insurance, shrinkage, and obsolescence reserve.

The implication for purchasing is that overstocking is more expensive than it looks. Carrying 3 months of demand instead of 1 month costs 2 × monthly demand × holding-cost rate per year — typically a six-figure number for any business with material inventory turnover.

Ordering and replenishment

The economic order quantity (EOQ) model identifies the order size that minimises the sum of ordering cost (per-PO labour, paperwork, freight, setup) and holding cost (capital, space, shrinkage). EOQ rises with demand and ordering cost; it falls with holding cost. The classic EOQ formula is √(2DS/H), where D is annual demand, S is cost per order, and H is holding cost per unit per year.

EOQ is a starting point, not the final answer. Real ordering decisions also consider supplier lead times, minimum order quantities, volume discounts, container sizes, and the volatility of demand. The EOQ calculator computes the theoretical optimum; the practical order quantity is usually within 30% of EOQ but constrained by one of those real-world factors.

Reorder point — the inventory level at which you place a new order — is a separate question. It depends on lead time and demand volatility: reorder point = average demand during lead time + safety stock. Safety stock is a function of the service level you want to maintain (typically 95–99%) and the standard deviation of demand. Underweighting safety stock causes stockouts; overweighting it inflates holding cost.

Warehouse operations

Warehouse cost is typically the second-largest line item in supply-chain operations, after the cost of goods themselves. It splits into fixed costs (rent, equipment depreciation, salaried management) and variable costs (per-pick labour, packaging materials, utilities scaling with throughput). Cost per unit stored or shipped is what matters for pricing and margin decisions.

A useful framing: total warehouse cost ÷ units throughput = cost per unit handled. Typical numbers are $0.50–$3.00 per unit handled, depending on automation, geography, and product class. Add the per-unit fraction of average inventory held (carrying cost) and you have a complete warehouse cost line for each unit sold.

The warehouse-cost calculator runs both sides — fixed cost amortisation and variable cost per unit — and produces a per-unit total. Run the same calculator with two different volume assumptions to test scaling: doubling volume usually reduces per-unit cost by 20–30% if fixed costs stay flat, which is why warehouse contracts typically negotiate aggressively on minimum-volume guarantees.

Shipping and landed cost

Shipping cost is rarely a single number — it is a function of distance, mode (road, rail, sea, air), volume, weight, dimensional weight, urgency, and destination. The shipping-cost-comparison calculator runs the same shipment through multiple modes so you can see the gap between a 3-day air freight and a 30-day sea freight on the same lane.

Dimensional weight is the most under-understood part of shipping cost. Carriers charge by the greater of actual weight and dimensional weight (volume ÷ a divisor). A bulky lightweight product can cost the same to ship as a small heavy product because dimensional weight dominates. The shipping calculator surfaces both numbers explicitly.

Landed cost goes further — it is the total cost of an imported item delivered to your warehouse, including the unit cost, freight, insurance, customs duties, tariffs, brokerage fees, and any inland transport. The headline manufacturing cost from an offshore supplier is often only 60–75% of the landed cost. The landed-cost calculator runs the full stack so margin decisions are made on the right number.

Trading off the four costs as one system

The four costs of supply chain — inventory holding, ordering, warehousing, and shipping — never move independently. Cutting inventory holding by 50% inflates ordering frequency, which inflates per-unit shipping cost (loss of consolidation discount) and may inflate warehouse cost (more receiving and put-away cycles per period). Reducing ordering frequency to lower ordering and shipping cost inflates inventory and warehouse costs. The right framing is system-level: minimise the sum across all four, at the chosen service level, rather than minimising each line item in isolation.

Every cost optimisation has a service-level cost. Faster shipping costs more per unit but improves customer experience and reduces stockouts; lower inventory cuts holding cost but raises stockout probability; smaller orders cut warehouse strain but raise per-PO and per-shipment costs. The right optimisation maximises (revenue − all costs) at the service level the business chose to compete at — a discount retailer running 92% in-stock at low cost will not optimise the same way as a premium retailer running 99% in-stock at higher unit costs. The first decision is the service level; the four-cost optimisation follows from it.

Supply chains drift. Tariff schedules change, fuel prices move, real estate costs reset on lease renewal, wage rates inflate, suppliers change minimum order quantities, and demand patterns shift. Any one of these inputs can move the optimum across all four costs by 10–30%. Re-running the inventory-holding-cost, EOQ, warehouse-cost, and shipping-cost-comparison calculators annually — with the most recent year of demand data and the most recent supplier and carrier quotes — catches the drift before it becomes a margin event. For most operations, the annual review is a half-day exercise that protects months of unnoticed cost creep.