Inventory Shrinkage Rate Calculator
Calculate inventory shrinkage rate by comparing book inventory with physical counts and measuring the loss percentage.
Shrinkage results depend on clean inventory data and consistent counting methods; reconcile with finance before reporting externally.
Examples
- Book inventory $500,000, physical inventory $487,500, tolerance 2.00% ⇒ Inventory shrinkage rate: 2.50% ($12,500.00 on $500,000.00 book inventory). Tolerance 2.00%: Above tolerance by 0.50%.
- Book inventory $250,000, physical inventory $257,500, tolerance blank ⇒ Inventory overage rate: -3.00% ($-7,500.00 on $250,000.00 book inventory). Tolerance 2.00%: Below tolerance by 5.00%.
FAQ
How often should shrinkage be measured?
Cycle counts monthly or quarterly with a full annual inventory audit are typical for most retail and distribution operations.
Should I use units or dollars?
Either works, but cost-based dollars are preferred for financial reconciliation and loss prevention budgeting.
What is a normal shrinkage rate?
Rates vary by sector, but many retailers target 1% to 2% annual shrinkage with tighter thresholds for high-value categories.
Additional Information
- Use inventory values at cost and ensure both figures reflect the same cut-off date.
- Shrinkage can reflect theft, damage, miscounts, or data timing issues; investigate variances beyond your tolerance.
- Negative shrinkage indicates overages and usually signals receiving or counting errors.