![]() ![]() Some of the disadvantages of dead stock are: Loss of customer interest: Ordering goods without proper market research and understanding customer needs and desires may often stack up goods with no consumer interest.ĭead stock is bad for any business as it increases expenses.When ordering goods from a vendor, you must make sure that they meet quality standards and are not defective. Defective goods: If the product doesn’t pass the quality test or is defective, there are more chances of that product remaining unsold.Providing discount or product bundling techniques may help in such cases. One must immediately rethink the selling strategies in such cases. Poor sales: This usually happens if the product becomes out of fashion, obsolete, etc.Inventory turnover ratio helps you to follow an effective schedule for ordering goods from your vendor. In simple words, ordering stock at the wrong time (when demand is low) or ordering too much inventory at a time. Inconsistencies in ordering: Practising inconsistent ordering practices lead to dead stock.Unrealistic expectations often lead to inaccurate forecasting. Forecasting means estimating from historical data. Incorrect forecasting: Incorrect forecasting happens when a business incorrectly predicts demand and orders too much inventory. ![]() Some of the common reasons for dead stock are: Poor inventory management techniques lead to dead stock. Thus, we can say that “inventory which doesn’t convert to turnover or which doesn’t get sold is called a dead stock.” In accounting, an item of stock that does not convert into turnover after a year is called dead stock. Still, if they aren’t sold, then they are categorised as dead stock. First, such items are moved to slow-moving inventory. One must understand that stock does not become dead overnight. Dead stock often includes damaged goods, incorrect deliveries, perishable goods, expired goods, etc. It is also called obsolete inventory, which isn’t expected to be sold. Dead stock is any unsold item which is lying in your inventory for a very long time. ![]()
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