How to Calculate Your Inventory Shrinkage – Atlanta Georgia

One of the truly unfortunate truths of business is that you’re going to have  inventory shrinkage ; the trick is controlling it and keeping it at a manageable level. Well, you can’t control what you don’t understand. Therefore I’ve compiled a short tutorial to show you how to calculate your inventory shrinkage . Hopefully this will allow you to get a better grasp on what you need to do to keep that shrink monster in the closet.

First, check your company’s records to determine the value of inventory that you should have in stock based on prior inventory totals and the value of goods sold. This number is known as the book value.

Next, total the actual value of inventory that you have in stock. This number will most likely be different than the book value because of losses, damaged goods or theft.

Now subtract the actual amount of inventory from the amount that you should have according to your own financial records. (You should be keeping an eye on your inventory shrinkage by logging your known losses, damages and theft throughout the year).

Divide the difference by the amount you should have to calculate the shrinkage rate. Multiply the shrinkage rate by 100 to convert to a percentage. This percentage is the amount of your inventory that has disappeared through theft, damage or paperwork errors. Depending on how you keep your books this number may be a little disheartening. However, there’s hope. This number is simply a starting point for you to examine your processes by and find out where and why your inventory shrinkage is at that level… and fix it.

For more information about inventory loss or inventory loss prevention or inventory shrinkage contact us: prevent retail theft or call 1.866.914.2567 – Atlanta Georgia

Posted December 6th, 2010 by Staff Writer and filed in prevent theft

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