What Is Dead Stock?

Dead stock refers to inventory that hasn't sold or moved for an extended period, typically taking up valuable warehouse space and tying up working capital. It includes:

1. Non-Moving Inventory: Items that haven't sold or been used in production for an extended period (usually 6-12 months). Often these items were initially purchased based on valid demand predictions but have since stagnated in your warehouses. This category particularly affects businesses with seasonal fluctuations, where timing and market predictions affect operations.
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2. Obsolete Stock: Products that are outdated, discontinued, or no longer in demand due to market changes. These items frequently result from rapid technological advancements or shifting consumer preferences in your industry. The challenge with obsolete stock is that its value typically continues to decrease over time, making quick action essential for recovering any remaining value.
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3. Excess Inventory: Stock quantities that significantly exceed your normal sales cycle or production needs. This situation often arises from bulk purchase decisions made to capture volume discounts or meet minimum order requirements from suppliers. While the initial purchase may have seemed financially sound, the carrying costs and space utilization can quickly outweigh any upfront savings.

Different sectors face unique challenges with dead stock - manufacturing operations might find raw materials becoming obsolete before use, while retailers struggle with seasonal items missing their selling window. Technology companies face particularly rapid product lifecycles, where new releases can quickly make existing stock obsolete. The financial impact extends beyond the direct cost of the items, affecting warehouse efficiency and working capital availability across your operations.

How to Calculate EOQ and Dead Inventory

Using industry benchmarks and advanced financial modeling, the inventory management calculator provides a comprehensive view of your dead stock position and optimization opportunities. Here's how to get an accurate assessment of your optimal inventory situation:

1. Enter your basic metrics: inventory value, age, revenue, and warehouse space. Our calculator applies industry-standard EOQ formulas and adjusts benchmarks based on your sector's typical turnover rates and seasonal patterns.
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2. Review impact analysis: See exactly how dead stock impacts your bottom line with a detailed breakdown of holding costs, opportunity costs of tied capital, and warehouse space burden - all translated into clear financial terms you can act on.
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3. Explore optimization scenarios: Compare three reduction strategies based on your readiness: a conservative 10% focused on quick wins, a moderate 15% using targeted reduction tactics, or an aggressive 20% transformation for maximum working capital impact.
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4. Generate implementation roadmap: Based on your data, receive a tailored action plan including quick-win opportunities, to reduce dead stock in the next 30-90 days, supply chain optimization tactics, adjustments to ordering patterns, safety stock levels, and supplier relationships, and long-term strategic recommendations flogical solutions to prevent future dead stock accumulation

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The calculator integrates seasonal patterns, industry benchmarks, and supply chain dynamics to provide you with a clear path toward improved inventory efficiency. Whether you're looking to free up working capital or optimize warehouse space, our calculator delivers the insights you need to make informed decisions.