gross shrinkage的意思|示意

Gross shrinkage refers to the total deterioration of physical material during an accounting period, and it is a common problem in inventory management. It can be caused by a variety of factors such as theft, defects, spoilage, breakage, etc.

To calculate gross shrinkage, the amount of inventory at the start of the accounting period is subtracted from the inventory at the end of the period. This figure is then divided by the starting inventory to obtain the gross shrinkage percentage.

For example, assume that the starting inventory is 1,000 items and the ending inventory is 800 items. The gross shrinkage percentage is calculated by subtracting 800 from 1,000 and dividing by 1,000, resulting in a gross shrinkage of 20%.

The key to reducing or eliminating gross shrinkage is tight inventory control. This includes keeping accurate records of purchases, sales, and other transactions related to inventory, as well as thorough employee monitoring. In addition, it’s important to develop and maintain strong relationships with suppliers to ensure the quality of the materials used.

Gross shrinkage can be costly for businesses, but it can be avoided or minimized with the right measures. Inventory control is the first step to reducing losses from gross shrinkage. When done well, it can help businesses save time, money, and resources.