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  • 1.  Inventory E+O Reserve Calculation for Distributor

    Posted 03-22-2011 03:52 PM

    We are an aerospace parts distributor and I am looking for some comparisons to how others calculate inventory excess & obsolete reserve.  We allow for open orders and a 3-year supply, then reserve 100% above the allowances.  Can anyone tell me what their policy is and type of business?



  • 2.  Re: Inventory E+O Reserve Calculation for Distributor

    Posted 04-07-2011 04:00 AM

    Hi John,

    I work for a large firm with businesses covering some pretty diverse markets including aerospace and cash handling equipment.  Most of our sites are manufacturers.  Company policy is to reserve for any production inventory exceeding 18 months usage.  Service parts are allowed 36 months.

    Lisa



  • 3.  Re: Inventory E+O Reserve Calculation for Distributor

    Posted 08-19-2011 01:05 PM

     Hi John -

    I work for an MRO parts distributor.  We take the last two years of demand and multiply times five to estimate five years of demand.  We reserve 100% above that.   However, I must say we are questioning this practice as some of our parts have low sales volume but will never be obsolete (i.e. hammers) yet we have them reserved in O & E.

    Regards,

    John