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Spoilage
Definition
Product that becomes unsellable due to expiration, damage, improper storage, or quality deterioration. Spoilage results in write-offs for the manufacturer or retailer and is especially critical in categories with short shelf lives, such as dairy, produce, or fresh bakery items.
How It's Calculated
Value of spoiled inventory (units x cost or wholesale value).
Example
A dairy manufacturer writes off 4,000 gallons of yogurt that expired in the warehouse before shipping, recording the loss as spoilage.
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