Question

2. An auditor is trying to figure out if the inventory at an electronics store chain is obsolete. What characteristics might be used to help establish a model predicting inventory obsolescence?

Answer 1

1.Date purchased

2.Date sold of similar type

3.Days in store

4.Price of item

5.# of items in stock

Some features that might help forecast inventory obsolescence are as follows:

1. The product is at present defective - faults on product could result to a substantial decrease in its value

2. Demand for the product is too low - low market demand could mean that the product is already outdated

3. Expired products - expired products couldn't be sold to the market therefore would be obsolete

4. Cost to sell the product is higher than its selling price - in this case, it is better to keep the item than to sell therefore, selling it would be complicated