Pricing for Obsolescence in the Navy Stock Fund: Is There a Better Way

The use of pricing surcharges in recovering costs associated with transportation as well as losses by inventory and obsolescence has long been used by stock fund managers. At the request of the Naval Supply Systems Command, this study was undertaken to assess the methodology of surcharge development for Navy Stock Fund items, and to determine if improvements were possible. Methods used for developing transportation and physical inventory loss portions of the surcharge have been examined and are considered adequate. Methods used for developing the obsolescence portion of the surcharge have been examined and several changes have been recommended. Such changes include the use of indexing to assist in comparing different years prices, a possible use of replacement cost accounting for inventory valuation, and a method of statistical accounting to better ascertain the adequacy of surcharges established. Author