2.9 Excess & Obsolete (E&O)

Inventory that does not turn over is a liability, not an asset. This chapter establishes the "Red Flags" for slow-moving inventory and the disposition processes to recover capital or floor space.

2.9.1 The Aging Triggers

• 90 Days (Warning): Inventory with no demand for 90 days is flagged for review. Planner must justify retention.
• 180 Days (Charge): Material with no movement for 6 months triggers a "Carrying Cost" evaluation. Customer may be invoiced for storage.
• 365 Days (E&O): Material with no movement for 1 year is classified as Obsolete.

2.9.2 Disposition Paths

1. Return to Vendor: Restocking fee negotiation.
2. Customer Ship: Ship to customer (if liability is established in MSA).
3. Broker Sale: Liquidation for cents on the dollar.
4. Scrap: Physical destruction and tax write-off.

Final Checklist