We have created the dummy location for damaged items and unticked the make inventory available check box for the inventory.
When we unticked the check box, the inventory at this location can be stocked but cannot be committed on sales orders or fulfillment.
If we create an inventory item for this location the qty on hand is shown on the item record but the qty available will not be shown in the record.
We can create the dummy location and use the inventory transfer option to transfer the damaged inventory to the dummy location.
(Note: If we continually transfer the damaged inventory to the dummy location, the damaged inventory stock for an item in that location will keep on increasing).