almost every organization is faced at some time with the problem of surplus and obsolete inventory. whatever the cause some action is required to reduce or eliminate these items from inventory. to accomplish this, management should first make certain that the buildup is not continuing due to present ordering policies. then it should take steps to dispose of stock. accurate perpetual inventory records showing acquisition and issue quantities and dates, as well as periodic review of the records, are necessary to identify obsolete and surplus items. obsolete materials inventory usually results when a product is redesigned or discontinued. prompt sale of the inventory for the first reasonable offer is often the vest policy.