How is "excess inventory" defined in materials management?

The definition of "excess inventory" in materials management pertains to stock levels that go beyond what the current market demand can support, making it unlikely that this surplus will be sold in a timely manner. This situation can arise due to overproduction, inaccurate forecasting, or changes in customer preferences.

When inventory exceeds demand, it ties up capital and storage space, creating costs associated with holding that inventory. Therefore, managing excess inventory is crucial as it can impact the financial health of the organization by incurring additional costs without providing a corresponding return on investment.

In contrast, the other definitions do not accurately capture the essence of excess inventory. Stock that meets demand or is frequently used refers to inventory that is well-aligned with market requirements, while stock that is damaged or unsellable refers to items that cannot be sold at all, rather than those simply in excess of demand. Thus, the provided definition aligns perfectly with the concept of excess inventory in a materials management context.