How to Calculate the Purchase Cost of Knock Down Bins?
The procurement cost of knock down bins needs to be extended from basic material costs to comprehensive cost accounting across the entire supply chain. The complete calculation formula is: Total Procurement Cost = Ordering Cost + Material Cost + Inventory Cost + Stockout Cost - Recoverable Residual Value, which accurately covers all dimensions of expenditure for a single purchase.
Specific Calculation Methods for Each Cost Item
Material Cost: This is the core component with the highest proportion. It is calculated directly using the formula: Material Cost = Purchase Quantity × Unit Price per Box. If customized models are involved, additional surcharges for special processes need to be added.
Ordering Cost: Calculated according to the annual procurement amortization rules, including the costs of procurement personnel's working hours, travel, order processing, etc., allocated to this purchase. For regular small-to-medium batch purchases, this can be simplified to the sum of miscellaneous expenses related to single order procedures and logistics.
Inventory Cost: Calculated using the formula: Inventory Cost = Qualified Received Quantity × Cost per Box × Storage Days × (Storage Fee Rate + Capital Occupancy Fee Rate) / 365. This corresponds to the holding costs incurred due to warehouse space and capital tied up after the knock down bins are received.
Stockout Cost: Refers to losses caused by logistics delays and order defaults due to untimely supply of knock down bins, resulting in goods not being shipped on time. It is calculated based on actual related compensation and expedited shipping costs.
Recyclable Residual Value Deduction: After knock down bins is scrapped, the value of the remaining recyclable parts such as sheet metal and metal buckles can be directly deducted from the total purchase cost, further reducing actual expenditures.
Advanced and Precise Cost Calculation Techniques
For more refined cost calculations, the basic material cost of a single box can be broken down based on activity-based costing: Single box material cost = weight of sheet metal × unit price of material - weight of scrap material × unit price of scrap recycling. Then, by adding the corresponding labor cost rate and manufacturing cost rate for production hours, the theoretical baseline cost of a single box can be calculated. This can be used to benchmark against supplier quotations and avoid overpaying.
Qingdao Feiyue Storage Equipment Co., ltd. is a manufacturer of storage and logistics facilities that integrates research and development, production, and sales. For more information about knock down bins, please contact us.
Address：Jiaozhou Industrial Zone,Huangdao District,Qingdao,China
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