Question 1

What is dead stock?

Accepted Answer

Dead stock refers to inventory that has not sold in a significant period (typically 90+ days) and has zero or near-zero sales velocity. It ties up capital, takes up warehouse space, and incurs ongoing holding costs without generating revenue.

Question 2

How is sales velocity calculated?

Accepted Answer

Sales velocity is calculated by dividing the total units sold in a given period by the number of days in that period. For example, if you sold 90 units in the last 90 days, your daily sales velocity is 1 unit per day.

Question 3

What are typical holding costs for inventory?

Accepted Answer

Inventory holding costs typically range from 20% to 30% of the item's value per year, or roughly $0.50 to $2.00 per unit per month for small goods. This includes warehousing, insurance, depreciation, and opportunity cost of capital.

Question 4

When should I liquidate dead stock?

Accepted Answer

Consider liquidation when an item has zero sales velocity for 90+ days and the ongoing holding costs exceed the potential recovery value. Common liquidation channels include clearance sales, bundle deals, donation for tax write-offs, or selling to liquidation companies.

Question 5

How can I prevent dead stock?

Accepted Answer

Prevent dead stock by using demand forecasting tools, setting reorder points based on actual sales data, running regular inventory audits, implementing first-in-first-out practices, and monitoring sales velocity trends to catch slowdowns early.

SKU Name	Current Stock	Units Sold (90 Days)	Unit Cost ($)	Monthly Holding Cost ($)

Dead Stock Calculator

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