If you have not already done so, set up reason codes in Manager to handle defective returns in POS. Run Manager, Database, Reason Codes and enter at least one reason code set to 'Return to offline inventory'. Example: Defective or missing part,, Warranty return, etc.
Note: You'll also want at least one reason code set to 'Return to main inventory' to handle refunds that will be placed back in stock. Example: Wrong size/type, Gift return, etc.
Next select Manager, File, Configuration, Options, Reason Code options and enable 'Prompt for reason code' and 'Require code' on returns.
When an item is returned at POS you will be prompted to select a reason code. If the code type selected is 'Return to offline' the item will be flagged as unsaleable and placed in Offline Inventory.
To manage your offline inventory, periodically run Manager, Inventory, Manage Offline Inventory. From here you can add defective or damaged goods to the offline inventory or transfer products out to supplier for replacement or credit.
Refurbished products can also be returned to the main inventory. Example: An item missing a part could be moved to offline while the missing part is on order from the supplier. When received, return the item to stock.
IMPORTANT: When you add items using Transfer Out you are flagging them for processing. To complete the transfer run Manager, Inventory, Transfer Out, select the order, click Issue, Issue All, Commit. That closes the transfer order.