S&OP, Demand Planning & Forecasting worked example

Slow Moving Inventory Exposure at 52% write-down probability: a worked example

What does the result look like when write-down probability reaches 52%? The full calculation is worked below with real intermediate numbers. An inventory planner uses it to size the obsolescence reserve before an S&OP markdown decision.

The inputs for this scenario

  • Slow-Moving SKUs On Hand: 180 SKUs (unchanged)
  • Average Inventory Value per SKU: 640 $/SKU (unchanged)
  • Write-Down Probability: 52 % (raised for this scenario; the documented default is 45)
  • Disposal & Handling Charge: 2,500 $ (unchanged)

Working through the calculation

  • Applying the documented formula (Total exposure = slow-moving SKUs x value per SKU x write-down probability % + disposal charge) to the inputs above produces each figure below.
  • At this operating point the engine returns 62,404 $ for total slow moving inventory exposure cost, the number this scenario is built around.
  • At this operating point the engine returns 347 $ / piece for slow moving inventory exposure cost per unit.
  • At this operating point the engine returns 59,904 $ for variable slow moving inventory exposure cost.
  • At this operating point the engine returns 2,500 $ for fixed slow moving inventory exposure adder.

How this compares with the baseline

  • Against the tool's baseline example, where write-down probability sits at 45% and the headline result is 54,340 $, this scenario comes in 14.84% above the baseline at 62,404 $.
  • A figure at this level is achievable when write-down probability is genuinely sustained, not just peaked for a shift. A single blended write-down probability across all slow-moving SKUs hides item-level variation — a discontinued custom casting may be 100% write-down while a slow but current fastener is near 0%, so segment high-value SKUs before trusting the total.

Results at a glance

  • Total slow moving inventory exposure cost: 62,404 $ (headline result)
  • Slow moving inventory exposure cost per unit: 347 $ / piece
  • Variable slow moving inventory exposure cost: 59,904 $
  • Fixed slow moving inventory exposure adder: 2,500 $

Run it with your numbers

  • Every input above is editable in the live Slow Moving Inventory Exposure calculator, which recalculates instantly and can be shared with the inputs intact.

Last reviewed 2026-05-12.