Description
Read example 2 and explain your take away from it. Add more information if possible. Your document should be minimum 200 words. Please have credible references.
Example 2:
Technological obsolesce can create problems when it comes to inventory, as new tech products frequently replace older versions. The electronics store chain in question should ensure that it can keep up with technological advances and predict if and when their inventory may become obsolete. Having excessive inventory that will eventually become useless to the company if newer tech has replaced older tech can end up costing the company a lot of money.
With computerized inventory tracking systems, the external auditor looking into this electronics company can audit the system to see the last date on which a particular inventory item was sold, as well as the date the item was purchased by the company. A report can be obtained from the inventory system that can sort this information with the oldest last sold date first, but this alone may not be a sufficient indicator that the item is becoming obsolete; perhaps demand is just low at the moment (Bragg, 2019). By further comparing to industry standards and what kind of products competitors are working on and releasing, the auditor can better confirm that the inventory may in fact become obsolete, if it hasn’t already. In addition, it may be best for the company to already have a set amount of time after which they consider the inventory to be obsolete. This can help prevent the restock of too much inventory that may not sell before the product becomes obsolete.
If the auditor has determined that the inventory is close to becoming obsolete, it may be best for the company to start selling the products at a discounted price. This can offset the cost of storing the obsolete inventory and is certainly a better option than just completely throwing the products away (Dear Systems, 2017). In the future, the company should better predict customer demand by researching historical trends in the technology industry, keeping up to date on new technologies in progress, and using automated ordering systems to prevent the over-stocking of certain inventory items.
References:
Bragg, S. (2019). How to identify obsolete inventory. Retrieved from https://www.accounting tools.com/articles/how-do-i-identify-obsolete-inventory.html#:~:text=The%20simplest% 20way%20to%20identify,of%20the%20annual%20physical%20count.
Dear Systems. (2017). Obsolete Inventory: How to Manage It, Get Rid of It, and Prevent It. Retrieved from https://dearsystems.com/obsolete-inventory/
Explanation & Answer
Attached.
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Technological Obsolesce
By: (Name)
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Date:
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TECHNOLOGICAL OBSOLESCE
Obsolete technology occurs when a product or a service is no longer needed in the market
due to change in preference to new products replacing the previous version. Old stock is harmful
to a business since it increases the cost of an inventory, and it is hard to get rid of it because its
demand is low. Obsolete inventory...
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