If a long supply continues to exceed 10 percent of the total stock of an item despite efforts to redistribute the long supply as provided in §101-27.303-2, the inventory manager shall establish an economic retention limit for the item in accordance with the provisions of this §101-27.304. An economic retention limit is the maximum quantity of an item that can be held in stock without incurring greater costs for carrying the stock than the costs for disposal and resulting loss of investment. The economic retention limit shall be used to determine which portion of the inventory may be economically retained and which portion should be disposed of as excess.

[41 FR 3858, Jan. 27, 1976]