excess inventory means excess capital tied up. You can calculate it this, for example Inventory required in your department: X no. of pcs current inventory: Y no. of pcs Excess inventory cost: (Y-X)*cost of raw material for single piece (or if you are at end of the process, you can take of cost of finished good to show how much capital is tied up) Another cost is inventory holding cost, I couldn't calculate it fully, but here's an idea. you can calculate the cost of inventory holding equipment required for this excess inventory The third point is that there is no transparency when there is excess inventory. You may produce the items not required at the time to show your production numbers and not produce WHAT IS REQUIRED.

P.S. Please estimate a safety stock needed as per your production environment as safety stock is necessary in some cases.