Run the Numbers
Example below is using variable amounts entered in transaction amount, yearly sales, and average profit margin (highlighted). Enter your own numbers and give it a spin:
$   transaction amount (from sale of slow moving parts)
$   Cents on the dollar
- $ total expense (transaction amount at 50% discount + 5% fee + estimated 3% for shipping)
$ net cash

Profit lost when retaining obsolete parts

ROI lost when retaining obsolete parts
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$ net cash (reinvested in fast moving parts)
x $ yearly sales
$ gross sales (from reinvested cash)
$ gross sales
x % average profit margin*
$ gross profit
$ gross profit
- $ net loss (listed above)
$ net gain (loss)
$ net gain
÷ $ transaction amount (listed above)
net ROI
* Calculations based on figures from Mike Nicholes “Professional Inventory Management” (2005)
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