Slow-moving inventory sells or is used more slowly than the business expects under its defined policy. Obsolete inventory has lost its intended useful or saleable role. “Dead stock” commonly describes stock with little realistic prospect of ordinary sale or use. A fixed number of days does not establish those conditions for every item.
SLOB stands for slow-moving and obsolete inventory. For a buyer, the useful job is to identify stock needing review, decide whether more is already committed, and compare realistic recovery options. An age flag starts that review; it does not automatically authorize a markdown, disposal or accounting write-off.
Choose the right signal
| Signal | Question it answers | Limitation |
|---|---|---|
| Days since last sale or use | Has demand stopped or slowed? | Seasonal goods and critical spares may legitimately wait |
| Age since receipt | How long has this stock been held? | Item-level totals may combine receipts of different ages |
| Stock divided by usage rate | How much cover does current stock represent? | A low or zero rate makes the result unstable or undefined |
| Usable life or expiry | Can it still be used for its intended purpose? | Requires the applicable product and handling rules |
| Remaining purchase commitments | Is more stock still due? | Cancellation or rescheduling depends on agreed terms |
A new receipt increases stock; it is not evidence of customer demand. An internal transfer moves stock between locations and may not reduce company-wide excess. Keep sales, consumption, transfers and receipts distinguishable when defining “movement.”
Do not use a generic food-aging table as a shelf-life rule. A product can require action long before an arbitrary slow-moving threshold, while a durable strategic spare can remain useful after a long inactive period.
Calculating a SLOB rate
SLOB rate = carrying value of items meeting the stated SLOB policy
/ total inventory carrying value in the same scope × 100
Count each item or quantity once if slow-moving and obsolete categories overlap. Use a consistent valuation date, cost basis and location scope. State how existing write-downs affect the values used.
For a fictional inventory portfolio valued at $50,000, suppose $6,000 is slow-moving and another $2,000 is obsolete, with no overlap. The combined SLOB rate is $8,000 / $50,000 = 16% under that policy. It is not a 16% loss estimate: recoverable value and eventual use still need assessment.
Report the underlying items alongside the percentage. A small value of unusable critical stock may demand faster action than a larger balance of seasonal goods awaiting its normal selling period.
Example: stop adding to an excess position
Assume a fictional retailer holds 96 usable units, expects eight units of weekly demand and has 48 more on an accepted supplier order. Existing stock represents 12 weeks of simple demand cover. Including the incoming quantity gives 18 weeks, before timing, reservations or changes in demand.
The buyer should inspect when the extra 48 are due and whether they are still required. Requesting cancellation does not erase the supplier commitment. Preserve the supplier's response, any fees and the accepted revision before removing that quantity from expected supply.
If the item is seasonal or demand is declining, a historical eight-unit rate may overstate future use. If a known customer order will consume the stock, the same position may be appropriate. The numbers identify the question; they do not decide it alone.
Compare recovery options on one time basis
Possible options include ordinary sale, an approved markdown, transfer to a location with demonstrated demand, supplier return, an alternative use or disposal. Confirm feasibility before comparing proceeds.
Suppose 100 units cost $20 each. A supplier offers a return credit of $15 per unit with a $50 collection fee: net recovery is $1,450. An alternative clearance scenario assumes all 100 sell at $18, with $100 incremental selling costs and $100 future holding costs: net recovery is $1,600.
The clearance scenario recovers $150 more under those assumptions, but takes time and depends on sell-through. If only 80 sell and the remainder has no recovery value, proceeds become $1,440 minus the same assumed $200 costs, or $1,240. The return then recovers $210 more.
The original $2,000 cost matters for the financial outcome, but it is already incurred in this decision. Compare future proceeds and avoidable future costs consistently, then have finance determine the applicable valuation and recognition. Do not add a retail-price markdown percentage to a carrying-cost percentage with a different base.
What caused the excess?
Review supplier minimums, demand changes, canceled customer needs, recipe or specification changes, forecasting errors and duplicate orders. Causes can arise after a reasonable purchase decision as well as during buying.
EOQ sizes a batch under cost assumptions. SBA estimates intermittent demand; it does not correct EOQ or guarantee that stock becomes productive. Use the forecast, inventory policy and supplier constraints together.
Likewise, ABC class measures value concentration under its chosen basis. It does not establish that C-items are normally obsolete or that A-items cannot accumulate excess. Review age, demand pattern and criticality separately.
Make the next purchasing decision explicit
For each flagged item, assign an owner, a next review date and an action on both current stock and outstanding orders. Adjust a replenishment recommendation only after checking the reason for the apparent slowdown. A one-off stockout can suppress recorded sales and make demand look lower than it was.
LineNow's inventory replenishment workflow connects purchasing context with stock and demand inputs. Demonstrate the age or usage fields and the reporting scope you need; an order history does not by itself prove lot-level aging or automatic obsolete-stock detection.
A living purchase order keeps proposed cancellations, changed quantities and actual receipts attached to the purchase. Use that record to prevent an unresolved commitment from silently adding to the excess position.