What does the term Obsolete Inventory refer to?

The term "Obsolete Inventory" refers specifically to inventory that is no longer usable or saleable. This usually occurs when items become outdated due to changes in technology, shifts in consumer preferences, or the introduction of newer products that replace the old ones. Once inventory becomes obsolete, it essentially loses its value and cannot be sold or utilized effectively, posing a challenge for inventory management as it must be accounted for and potentially disposed of appropriately.

The choices that refer to inventory nearing expiration, unsold items during a sale, or excess inventory do not align with the definition of obsolete inventory, as these situations may still involve usable or potentially sellable items, albeit in different contexts.