6-2 Write Off Inventory

Inventory is stock of raw materials, work in process, and finished goods being held at a given time. Inventory is generally the least-liquid item listed by the Postal Service in the current asset account of its balance sheet. Despite investment recovery, many items remain in excess after completion of contract performance because of the nonliquid nature of inventory. Any warehouse operation, regardless of how efficiently it is managed, accumulates excess inventory, usually from errors regarding demand forecasts or record keeping. When excess inventory cannot be used for alternative purposes, it becomes obsolete.

The inventory control plan (which contains data on the quantities, locations, and conditions of inventory that is due in, on hand, and due out) is used to avoid both the overstocking and the obsolescence of inventory. Obsolete inventory does not create any value for the Postal Service because this type of inventory cannot generate revenue or create cost savings. The residual material, if not usable elsewhere in the Postal Service, is then considered obsolete and will go through the normal disposal process.