Use the programs in the Obsolete Inventory Analysis menu (3.5.1) as an analysis tool to identify inventory investments that depreciate and future demand for inventory. Once you identify and analyze obsolete inventory, your company financial experts can book a reserve, then use the reserve to create an inventory write-off.

Because improperly valued inventory can cause problems in company financial statements, the obsolete inventory analysis tool calculates an inventory supply value based on current inventory usage for specific inventory types over a predefined period. You define the inventory types. You can also create and assign depreciation rates for each inventory type.

You can use the obsolete inventory analysis tool to calculate demand for future inventory. You can choose to add the demand calculations to coverage calculations or use the greater of the two calculation results when determining the coverage.

You can specify transactions to extract for analysis; then either extract using Extract Consumption (3.5.1.7) or using Obsolete Inventory Analysis (3.5.1.9). Obsolete Inventory Analysis calculates the number of periods of supply coverage and the value of obsolete inventory reserve based on depreciation rates.

Obsolete inventory analysis programs summarize and organize analysis data in several reports or for output to several formats. The analysis data provides essential information that lets you reduce inventory and save costs as your company monitors usage and obsoletes any outdated or no-longer-used items. After you analyze data, you can choose to delete or archive the data you extracted for analysis.