- The value of the money invested in inventory.
- The value of the space and other costs associated with storing inventory.
- Square footage value or cost.
- Heat, light, racking, insurance, handling equipment.
- Unique storage requirements for certain materials.
- The costs associated with the managing of the inventory.
- Systems, warehouse personnel.
- The costs associated with physical storage.
- Damage, Pilferage,
- Shelf life expiration, or physical deterioration to the product.
- Potential depreciation in value of the materials
- Lot sizes
- Minimum order quantity.
- Minimum purchase commitment.
- Limitations on cancellation or rescheduling.
- Extended lead times.
- Forced end of life buys, etc.
If the supplier ships short, late, or inconsistently or the supplier has a quality problem
It requires you to carry increased safety stock inventory
In there are warranty failures or reliability problems
It requires you to carry increased spare parts inventory
If there are delays in getting products replaced when needed
It requires a higher safety stock or spare parts inventory