formula for accepting restock fee

[joeccu]

I'm trying to create a formula that will determine when incorrectly ordered inventory should be held in stock (with the hope of selling it in the future), verses returned with a restocking fee. I believe it will be a function of the original purchase price, the restock fee, IRR, and time?

Does any one have any ideas? I'm sure this already exists with supply chain managers, but I can't find anything online.

 

[Skybluekid]

I'm trying to create a formula that will determine when incorrectly ordered inventory should be held in stock (with the hope of selling it in the future), verses returned with a restocking fee. I believe it will be a function of the original purchase price, the restock fee, IRR, and time?

Does any one have any ideas? I'm sure this already exists with supply chain managers, but I can't find anything online.

If you can supply a sample of data, am sure that someone will be able to help

 

[joeccu]

If you can supply a sample of data, am sure that someone will be able to help

Original Price $2500
Restocking fee of 25%
IRR of 35%

So again the question is, do we put the $2500 (incorrectly ordered) inventory part on the shelf and hope it gets sold in the future, or do we pay the restock fee of $625 (in this case) so that we don't tie up $1825 (2500-625), which could be earning a return of 35%. I think there is a time component to this. For example, the answer returned from this formula is after 1.3 years you would have been better off returning it and paying the restock fee.