There are many ways in which Megaventory can support tracking damaged / faulty / waste / used / demonstration products. One should follow an approach after consulting with an accountant. Here are a few suggestions - we're using damaged as an example but the methods apply to the other cases:
Create a client specifically for faulty goods. Products can then be transferred to that client and be returned from that client. This is useful in the case of demonstration products or consigned goods.
Create an inventory location specifically for damaged goods. Products can then be transferred to and from that location by an Internal Transfer document. Using that approach you can return back from that location only as many products as it is allowed and no more. This approach also allows you to know how many items per product code are in a damaged state and also know the value locked in them.
Transform goods from a non-damaged product code to a damaged product code. An individual Bill of Materials is necessary for each product code and each related Production Order 'creates' the respective damaged good. This approach combines the benefits of the above and also provides the benefit of having separate product codes for damaged and non-damaged goods which is useful for reports and more complete stock keeping. It also allows the process of converting goods to damaged to be associated with a corresponding cost (within the appropriate Production Order). This is the most complete solution which also has the most overhead.
Damaged products can be written off entirely by doing an Inventory Adjustment. That way you can reduce the stock levels per product code per location down to the appropriate levels (i.e. those including only non-damaged goods).
In some cases, it is also possible to combine some of the above suggestions (e.g. have both an inventory location and manufacture products from 'working' to 'damaged').
The final choice depends on the attributes which need to be tracked (stock levels, value, both), whether damaged goods are mean to be repaired and return from the dump pile, who receives these types of goods, how detailed tracking you need to have of the goods while they are in the damaged pile, etc.