Wholesalers and retailers pay greater carrying charges in holding inventories of large quantities of forward-bought items.

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Carrying charges refer to the costs incurred by holding and storing inventory, such as warehousing, insurance, and interest on financing. Wholesalers and retailers who purchase large quantities of goods in advance (i.e. forward-bought items) will have higher carrying charges due to the increased amount of inventory they are retaining for a longer period of time.

Wholesalers and Retailers Pay Greater Carrying Charges in Holding Inventories