Definition

Dead stock is inventory no one wants to buy. When your company cannot sell it's remaining inventory after a time, the stock is “dead.” Spoilage is the same concept, but for fresh items such as expired food.Dead stock is bad for your company because it’s expensive.

It ties up working capital, impacts revenue, increases carrying costs (warehouse, administrative cost, etc.) and takes up valuable warehouse or shelf space.

How can dead stock impact my business?

• Dead stock can lead to:
• Lost money
• Increased holding costs
• Increased employee wages
• Less inventory space

Formula

Dead/spoiled stock = (amount of unsellable stock in period / amount of available stock in period) x 100