Inventory Accuracy

In order to maintain systems that meet the customer demand, customer fulfillment and production a company needs to have hundred percent accurate inventory records. In order to have an idea of accurate records of the inventory we need to have following information in hand.

• The Quantity of inventory in hand
• The location of the inventory
• Unit of measure of inventory
• Part number of the units

If one of these item’s calculation went wrong in the inventory the entire stock of the inventory becomes erratic. For example if the quantity of the inventory is accurate but the location code is wrong the material handling staff or the shipment staff won’t be able to locate correct items from the inventory. In the same way if the part number is inaccurate the entire stock may becomes useless.

The inventory accuracy has a formula in which the number of totally accurate inventory test items is divided by the total number of inventory items sampled. The accurate inventory item is that item which has actual quantity, accurate location, accurate unit of measure and accurate part number.

Number of completely test inventory items/ total number of inventory items sampled

Other Related Accounting Articles:

• Internal Controls of an Inventory
• Consigned Stock
• Inventory with High Turnover
• Obsolete Inventory Percentage
• Maximum Level or Maximum Limit of Stock
• Retail Inventory Method
• Materials Ledger Card–Perpetual Inventory
• Requirements of a System of Materials Control
• Stock Control
• Net Realizable Value