This thesis contains a literature search detailing authors' opinions on the percentage value of inventory carrying costs, the importance of these costs to firms, the advantages and disadvantages to carrying inventory, and the components that should be included in inventory carrying costs. This information is contrasted with information received from a sample of Iowa manufacturers who responded to a survey inquiring about their inventory objectives, their use of inventory carrying costs in making inventory holding decisions, how they arrive at those costs, and the components they include in those costs. Many interesting findings were discovered in the research. These included a wide variance of authors carrying cost percentages and a response by 82% of the manufacturers surveyed that they do not use inventory carrying cost to make purchasing and holding decisions. Another interesting finding was a marked difference in carrying cost components reported by authors and manufacturers.