In addition to the cost of warehouse space to store items, production costs can be affected because…

➤ How do you calculate the additional production cost caused by stock losses and damage?
Calculate added production cost by estimating lost or obsolete units, multiplying by unit manufacturing cost, and adding replacement procurement and overhead allocation. Include labor rework, expedited shipping, and quality inspection costs. Express results as total dollars or per‑unit increase to guide pricing, inventory policy, and production volume decisions.