[Code of Federal Regulations]

[Title 41, Volume 2]

[Revised as of July 1, 2005]

From the U.S. Government Printing Office via GPO Access

[CITE: 41CFR101-27.405]



[Page 125]

 

           TITLE 41--PUBLIC CONTRACTS AND PROPERTY MANAGEMENT

 

          CHAPTER 101--FEDERAL PROPERTY MANAGEMENT REGULATIONS

 

PART 101-27_INVENTORY MANAGEMENT--Table of Contents

 

          Subpart 101-27.4_Elimination of Items From Inventory

 

Sec. 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:



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                                                               Minimum

                                                              number of

                                                            requests per

    Orders per year under economic order quantity (EOQ)        year to

                                                               justify

                                                            continuation

                                                              in stock

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12 and over...............................................           24

11........................................................           22

10........................................................           20

9.........................................................           18

8.........................................................           16

7.........................................................           14

6.........................................................           12

5.........................................................           10

4.........................................................            8

3 and under...............................................            7

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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 per order...................................         $55

Under EOQ:

  6 orders at $5 per order..................................         $30

  Holding cost (equal to ordering cost).....................          30

                                                             -----------

 Total......................................................          60

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