Material (inventory items) Returns to the warehouse from the field

Hello all;

Our inventory team has questions regarding how to handle inventory materials returned to the warehouse.  Our inventory is not used in manufacturing but rather for self-constructed assets such as telecommunications plant.  We use average costing for our inventory.  We do not use serial number tracking at this time.

One of our issues is new inventory items that are “Bad out of box” and have been returned to the warehouse from a construction project.  These items are not currently returned to inventory because we don’t want to show them as On Hand quantity available for use.  We would like to track them in EBS for internal control purposes.