Supply Chain & Procurement worked example

Inventory Obsolescence Cost at 58% probability of obsolescence: a worked example

This worked example runs the inventory obsolescence cost numbers for a tougher week than the baseline: 58% probability of obsolescence instead of the typical 80%. Estimate obsolete inventory cost from at-risk value and write-down rate.

The inputs for this scenario

  • At-risk units in inventory: 100 units (held at the documented default)
  • Carrying value per unit: 45 $ / unit (held at the documented default)
  • Probability of obsolescence: 58 % (the input this scenario stresses; the baseline uses 80)
  • Fixed disposal and write-off cost: 250 $ (held at the documented default)

Working through the calculation

  • The calculation starts from the formula this tool documents: Weighted cost = quantity × rate × capture factor + fixed adjustment.
  • Total inventory obsolescence cost works out to 2,860 $ at these inputs, and this is the headline figure for the scenario.
  • Inventory obsolescence cost per unit works out to 28.6 $ / piece at these inputs.
  • Variable inventory obsolescence cost works out to 2,610 $ at these inputs.
  • Fixed inventory obsolescence cost adder works out to 250 $ at these inputs.

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 25.71% below the baseline at 2,860 $.
  • 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. A result at this level usually justifies acting on the stressed input before touching anything else, because every other figure in the table is downstream of it.

Results at a glance

  • Total inventory obsolescence cost: 2,860 $ (headline result)
  • Inventory obsolescence cost per unit: 28.6 $ / piece
  • Variable inventory obsolescence cost: 2,610 $
  • Fixed inventory obsolescence cost adder: 250 $

Run it with your numbers

  • To rerun this with your own numbers, open the live Inventory Obsolescence Cost calculator, set probability of obsolescence to your actual value, and adjust the remaining inputs to match your operation.

Last reviewed 2026-05-12.