FREE TOOL
Excess and obsolete inventory finder
Excess inventory is stock beyond what you will use in a set number of months. Obsolete inventory is stock that has not sold or been issued in a long time and probably will not. Paste or upload your inventory export and this tool shows the dollars tied up by age since the last sale, the excess and obsolete split, the top parts with a suggested action for each, and the reserve with its journal entry. Most plants run this as a quarterly spreadsheet; Morsa watches the same numbers every day from your ERP and acts on your approval.
Updated October 21, 2026
Excess vs obsolete inventory
| Term | What it means | How this tool flags it |
|---|---|---|
| Excess inventory | More on hand than you will use soon. The part still sells. | On hand minus open demand minus the months of usage you keep (12 by default), times unit cost. |
| Slow moving inventory | Sells, but slowly enough that holding it costs more than it earns. | Shows up in the 91 to 365 day age buckets. |
| Obsolete inventory | No sale or issue for a long time; the market or the product line has moved on. | No sale for 9 months by default (set your own). The whole part is counted. |
| Dead stock | Obsolete stock with no realistic buyer. | No sale past the scrap age (24 months by default): write down or scrap. |
Excess and obsolete together are often shortened to E&O, or SLOB for slow moving and obsolete.
How to identify slow moving inventory
Export on hand, unit cost and the last sale or issue date for every part from your ERP. Add 12-month usage, on order, supplier and location if you have them.
Pick an as-of date and age every part: days since its last sale.
Group the dollars into age buckets (0 to 90, 91 to 180, 181 to 365, over 365 days). The older buckets are where cash is stuck.
Compare on hand with usage. Anything beyond your months-of-stock target is excess, even on a part that sells.
Sort by dollars, not by part count. In most files a handful of parts hold most of the money.
Worked example: the sample file
The sample is a two-plant valve maker as of October 12, 2026. Of $621,860 on hand, $412,000 has not sold in 9 months or more, across 9 parts. The top three: 52-1140 gas spring $96,000, 29-0310 spring pin kit $71,000, 38-0042 bracket kit $58,000. Another $34,660 sits beyond 12 months of usage on 5 parts that still sell.
52-1140 gas spring: 400 more are on order. Stop reorders first, then offer the 1,600 on hand to a closeout buyer.
29-0310 spring pin kit: bought from Tai-Ho 83 days ago, inside the 180-day return window. Ask Tai-Ho to take them back under their return terms.
17-0950 ball valve: Dayton has 300 sitting idle while Reno has 300 on open orders and none on hand. Transfer them instead of buying: $10,350 that never has to be spent.
What to do with excess and obsolete inventory
The tool picks one action per part from fixed rules, in this order, and the CSV says which rule fired.
| Action | When it fits | Why first |
|---|---|---|
| Transfer | The same part is short at another location. | Costs only freight, and stops a purchase. |
| Stop reorders | Stock is on order or a reorder point is set. | Stops the pile growing. Do it before anything else. |
| Return to the supplier | Bought recently from a named supplier. | Recovers the most cash. Expect a restocking fee; check the supplier’s terms. |
| Discount or closeout | Still sellable, nobody here needs it. | Turns stock into some cash now, before it ages further. |
| Write down or scrap | No sale past the scrap age. | Clears the books and the shelf; take the tax deduction with your accountant. |
The E&O reserve and the write-down journal entry
Under US GAAP (ASC 330) and IFRS (IAS 2), inventory is carried at the lower of cost and net realizable value. When parts will not recover their cost, you book a reserve (also called an allowance or provision for slow moving inventory) through cost of goods sold. A common method is a percentage of value per age bucket. This tool’s defaults are 0% up to 90 days, 10% at 91 to 180, 25% at 181 to 365, and 50% beyond a year; set them with your accountant or auditor.
| When | Debit | Credit |
|---|---|---|
| Booking or raising the reserve | Inventory obsolescence expense (cost of goods sold) | Inventory reserve |
| Scrapping parts already reserved | Inventory reserve | Inventory |
| Writing off parts with no reserve | Inventory obsolescence expense | Inventory |
On the sample, the default percents give a $168,863 reserve. Enter what is already booked and the tool shows only the difference.
Under US GAAP a write-down sets a new cost and is not reversed if the value comes back. IFRS allows a reversal up to the original cost.
The modern way: let the system watch it
A quarterly E&O review finds the problem after the reorders went out. Morsa connects to your ERP and answers “where’s cash tied up in inventory?” by text with the parts and an action for each. Approve, and it stops the reorders, starts the supplier return request, and sets up the plant-to-plant transfer. The rules on this page are the same ones it uses; it just runs them every day.
How to reduce excess inventory going forward
Reorder on current usage, not last year’s. Review min and max on parts whose usage dropped.
Watch lead times. Long or unreliable supplier lead times push buyers to over-order. The safety stock calculator sizes the buffer from real variation.
Buy closer to demand on slow parts: smaller lots, even at a worse unit price. Check the purchase price variance before you trade price for quantity.
Look across plants before buying. A part idle in one building is a purchase saved in the other.
Negotiate return rights and consignment for slow or new parts when you sign the supplier.
Frequently asked questions
What is the difference between excess and obsolete inventory?
Excess inventory still sells, you just have too much of it. Obsolete inventory has stopped selling. This tool counts only the units beyond your months-of-usage target as excess, and the whole part as obsolete once it has gone the set number of months without a sale.
How many months without a sale makes inventory obsolete?
There is no single rule. Many manufacturers and distributors use 9 or 12 months, and some use 6 for fast-moving lines. Pick one, write it down, and use it every quarter so the number moves for real reasons.
How do I calculate an inventory reserve?
Group inventory value by age since the last sale, apply a reserve percentage to each bucket, and add them up. Compare the total with the reserve already on the books and book the difference: debit inventory obsolescence expense, credit inventory reserve.
What columns does my file need?
Part, on hand, unit cost (or extended value), and a last sale or last issue date (or 12-month usage). Location, supplier, on order, reorder point, open demand and last receipt date make the suggested actions better. Header names are matched loosely, so most ERP exports work as they are.
Is my inventory file uploaded anywhere?
No. The file is read in your browser and nothing leaves your device.
Can I sell obsolete inventory?
Often, yes: back to the supplier under return terms, to another plant or a customer who still uses the part, or to a surplus or closeout buyer, usually at a steep discount. What cannot be sold is written off and scrapped.
Related tools
WHERE MORSA FITS
Know what is not moving before the next reorder goes out.
Morsa reads stock, usage and open POs from your ERP, flags slow movers every day, and stops reorders, starts supplier returns and sets up transfers once you approve. It answers in email, Teams, WhatsApp or whatever you already use.
