Supply Chain & Procurement worked example

Inventory Obsolescence Cost at 92% probability of obsolescence: a worked example

This scenario runs the inventory obsolescence cost calculation on the strong side: 92% probability of obsolescence, with every other input held at its documented default. Use it when inventory obsolescence cost in supply chain and procurement is being put through a supply chain and procurement weighted-cost review.

The inputs for this scenario

  • At-risk units in inventory: 100 units (unchanged)
  • Carrying value per unit: 45 $ / unit (unchanged)
  • Probability of obsolescence: 92 % (raised for this scenario; the documented default is 80)
  • Fixed disposal and write-off cost: 250 $ (unchanged)

Working through the calculation

  • Applying the documented formula (Weighted cost = quantity × rate × capture factor + fixed adjustment) to the inputs above produces each figure below.
  • At this operating point the engine returns 4,390 $ for total inventory obsolescence cost, the number this scenario is built around.
  • At this operating point the engine returns 43.9 $ / piece for inventory obsolescence cost per unit.
  • At this operating point the engine returns 4,140 $ for variable inventory obsolescence cost.
  • At this operating point the engine returns 250 $ for fixed inventory obsolescence cost adder.

How this compares with the baseline

  • Against the tool's baseline example, where probability of obsolescence sits at 80% and the headline result is 3,850 $, this scenario comes in 14.03% above the baseline at 4,390 $.
  • Use it during quarterly reserve reviews, after an engineering change or product end-of-life, or when an excess-and-obsolete report flags a lot of slow-moving stock. Treat this as a target state: the delta against the baseline quantifies what the improvement is worth before you commit to chasing it.

Results at a glance

  • Total inventory obsolescence cost: 4,390 $ (headline result)
  • Inventory obsolescence cost per unit: 43.9 $ / piece
  • Variable inventory obsolescence cost: 4,140 $
  • Fixed inventory obsolescence cost adder: 250 $

Run it with your numbers

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

Last reviewed 2026-05-12.