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Obsolete Inventory

Source: Investopedia
This Article has been Edited for Accessibility

Obsolete Inventory

What is 'Obsolete Inventory'

Obsolete inventory is a term that refers to inventory that is at the end of its product life cycle and has not seen any sales or usage for a set period of time usually determined by the industry. This type of inventory has to be written down and can cause large losses for a company.

Also referred to as "dead inventory" or "excess inventory".

Explaining 'Obsolete Inventory'

Large amounts of obsolete inventory are a warning sign for investors: they can be symptomatic of poor products, poor management forecasts of demand, and poor inventory management. Looking at the amount of obsolete inventory a company creates will give investors an idea of how well the product is selling and of how effective the company's inventory process is.

Additional Resources

  1. A Methodology To Evaluate Obsolete Inventory In Health Care []
  2. Evaluating Obselete Inventory Policies In A Hospital's Supply Chain []
  3. Inventory Management.. []
  4. Excess Inventory And Long-term Stock Price Performance []
  5. Actions And Strategies For Avoiding Obsolescence []
  6. The Economic And Environmental Implications Of Centralized Stock ... []
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