How do returns affect inventory?

A returned unit is not automatically sellable stock. It has to be received, inspected, and dispositioned — back to sellable, to refurbishment, to liquidation, or to scrap — and only the first adds to available inventory. Counting returns as available on arrival overstates what you can promise.

Disposition rates vary enormously by category, and the rate is a planning input. An apparel line where four in five returns resell is a different inventory model from one where most returns are unsellable.

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