Dead Stock Percentage Calculator

What is Dead Stock Percentage?

Dead Stock Percentage is the proportion of inventory that has not been sold or used for an extended period, typically 6-12 months or longer. It represents the percentage of stock that is not generating revenue and is tying up capital.

Dead Stock Percentage Calculation

• Formula: (Dead Stock Value / Total Inventory Value) × 100
• Example: Total Inventory Value of $100,000, Dead Stock Value of $10,000
  • Dead Stock Percentage = ($10,000 / $100,000) × 100 = 10%

Key Points

• Dead stock is inventory that hasn't sold or been used in a long time, typically 6-12 months or more
• A lower dead stock percentage indicates better inventory management
• The acceptable percentage varies by industry, but generally should be kept as low as possible
• Dead stock ties up capital and incurs storage costs without generating revenue
• This metric should be analyzed alongside other inventory metrics like turnover ratio

Why Dead Stock Percentage Matters

• Indicates efficiency of inventory management and purchasing decisions
• Helps identify slow-moving or obsolete items in inventory
• Impacts cash flow and working capital
• Affects storage costs and warehouse efficiency
• Can signal issues with product lifecycle management or market demand
• Influences profitability and return on investment

Strategies to Reduce Dead Stock Percentage

• Implement better demand forecasting techniques
• Use inventory management software for real-time tracking and alerts
• Conduct regular inventory audits to identify slow-moving items early
• Consider bundling slow-moving items with popular products
• Offer discounts or promotions to clear out aging inventory
• Improve product lifecycle management
• Explore options for returning unsold items to suppliers
• Donate or liquidate long-standing dead stock
• Implement a just-in-time (JIT) inventory system where feasible
• Improve communication between sales, marketing, and inventory management teams