Unit Cost is the total expense incurred to produce, procure, or store a single unit of product. It includes purchase price, transportation, handling, storage, and any other overhead allocated to the product. Accurately calculating unit costs is essential for pricing, profitability analysis, and inventory valuation. It also affects decisions about inventory replenishment and sourcing strategies. Inventory optimization systems integrate unit cost data to recommend stocking policies that minimize total cost while meeting service requirements. This holistic cost view supports more profitable supply chain decisions.
