41 C.F.R. Subpart 101–27.4—Elimination of Items From Inventory
Title 41 - Public Contracts and Property Management
Source: 32 FR 12401, Aug. 25, 1967; 32 FR 12721, Sept. 2, 1967, unless otherwise noted.
This subpart establishes policy and procedures designed to assure that items which can be obtained more economically from readily available sources, Government or commercial, are eliminated from inventory. For items which are not readily available from Government or commercial sources or are being held in inventory for a one time construction project, this subpart shall be applied to the extent feasible by the activity managing or controlling such inventories.
Title 41: Public Contracts and Property Management
PART 101–27—INVENTORY MANAGEMENT
Subpart 101–27.4—Elimination of Items From Inventory
§ 101-27.400 Scope of subpart.
§ 101-27.401 [Reserved]
§ 101-27.402 Applicability.
The provisions of this subpart are applicable to all executive agencies in connection with inventory items maintained at stocking activities other than Government wholesale supply sources.
§ 101-27.403 General.
By eliminating inactive items and slow-moving items which are readily available, when needed, from Government wholesale supply activities or from commercial sources, the costs to the Government in inventory investment and for maintaining the items in inventory can be eliminated. An “inactive item” is an item for which no current or future requirements are recognized by previous users and the item manager. A “slow-moving item” is an item for which there are current or future requirements, but the frequency and quantity of such requirements do not make it economical to stock them in lieu of obtaining requirements from other sources when needed. However, “standby or reserve items” are not to be eliminated from inventories. A “standby or reserve item” is an item for which a reserve stock is held so that the items will be available immediately to meet emergencies for which there is insufficient time to procure or requisition the items without endangering life or causing substantial financial loss to the Government.
[41 FR 3859, Jan. 27, 1976]
§ 101-27.404 Review of items.
Except for standby or reserve stocks, items in inventory shall be reviewed periodically (at least annually) to identify those which are inactive and slow-moving. This review may be conducted coincidently with the normal replenishment or long supply reviews. The estimate of current or future requirements for an item shall be based on its recent history of recurring requirements. Standby items shall also be reviewed at appropriate intervals to substantiate their qualification for inclusion in that category.
§ 101-27.405 Criteria for elimination.
Inactive items, items which no longer qualify as standby, and slow-moving items which are readily available, when needed, from Government or commercial sources shall be eliminated from inventory. The determination of a slow-moving item shall be based on a comparison of the costs for continuing to maintain it in stock as opposed to the costs for ordering it from outside sources each time it is requested. This comparison shall also consider any difference in price and transportation costs for each alternative. In the absence of criteria for stockage of an item developed and used by an agency, the desired results will be obtained through application of the following table:
------------------------------------------------------------------------ Minimum number of requests per Orders per year under economic order quantity (EOQ) year to justify continuation in stock------------------------------------------------------------------------12 and over............................................... 2411........................................................ 2210........................................................ 209......................................................... 188......................................................... 167......................................................... 146......................................................... 125......................................................... 104......................................................... 83 and under............................................... 7------------------------------------------------------------------------Note: Except for the low dollar infrequently ordered item, which requires a higher minimum, an item should be discontinued from stock if the number of requests for it is less than twice its order frequency under EOQ. For example, an item ordered six times per year under EOQ should have at least 12 requests per year to continue stockage. For 11 requests, it would cost less to order each time it was requested.
--------------------------------------------------------------11 orders at $5 $55 per orderUnder EOQ: 6 orders at $30 $5 per order Holding cost 30 (equal to ordering cost)....... ------------------------------------------------ Total 60------------------------------------------------------------------------
§ 101-27.406 Disposition of stock.Stocks of slow-moving items which are not otherwise determined to be eligible for continued stockage shall be eliminated through normal attrition and shall not be replenished. The successive actions indicated in paragraphs (a) through (c) of this section, shall be taken, as necessary, to remove stocks of inactive items from inventory. (a) Transfer stock to other offices where needed within the agency. (b) Transfer stock to other agencies as follows: (1) Centrally managed items to the agency managing the item for credit; or (2) Agency program items to agencies requiring them. (c) Dispose of remaining stocks, as excess, after actions taken in paragraphs (a) and (b) of this section, in accordance with subpart 101–43.3. Browse Previous | Browse Next
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