The Costs of Holding Stocks

This text discusses the costs of holding stocks. It asks trainees to consider the facilities and staff involved in storing goods, as well as the financial costs of “tying up” money in stock.

Questions

• Do you keep stock personally, at home?
• Would your society save money if it did not have to hold any stocks?
• What facilities and staff are involved in storing goods?
• What other costs are involved in holding stocks?

Answers

1. Most people keep some stock of foodstuffs at home.
2. Yes, societies would save money if they did not have to hold any stocks.
3. The facilities and staff involved in storing goods include storerooms, warehouses, storage compounds, staff to protect, inspect and maintain/move the stock, administrative systems to control stock levels, protective coverings, greasing or other protection to protect metal items from rusting, special packaging, chemical treatments to rotting or insect damage, silos, bins, tanks or similar equipment.
4. In addition to the physical facilities, the costs of holding stocks include insurance against fire and theft, and the financial costs of “tying up” money in stock.