Question

f an entrepreneur inherits obsolete inventory, what is the best course of action?
Sell it at a discounted rate
Count it as a valuable asset
Return it to the supplier
Exclude it from operational decisions

Answer 1

When dealing with obsolete inventory, the best course of action would typically be to **sell it at a discounted rate.** This allows the entrepreneur to recoup some of the costs associated with the inventory, even if it is not selling at full price. Selling at a discount can also help clear out space for more relevant products, improve cash flow, and avoid the complete loss of value associated with holding onto obsolete items.

Here’s a brief overview of the other options:

- **Count it as a valuable asset**: This is generally not advisable, as obsolete inventory has little to no market value and counting it as an asset can misrepresent the financial situation of the business.

- **Return it to the supplier**: This option may not be realistic or possible unless there's an agreement in place or if the items are still under warranty. Most suppliers will not accept returns for obsolete items.

- **Exclude it from operational decisions**: Ignoring obsolete inventory can lead to larger issues, such as inventory mismanagement and an inaccurate understanding of the business's assets.

Therefore, selling it at a discounted rate is usually the most pragmatic approach.