Inventory Shrinkage Calculator: Reveal Hidden Losses
Inventory shrinkage quietly chips away at your bottom line. This calculator turns your raw data into a clear shrinkage percentage.
How to Use This Inventory Shrinkage Calculator
- (Optional) Select your industry to benchmark against peers.
- Enter your total inventory value (dollar amount).
- Input the shrinkage value—the total loss you want to analyze.
- Click Calculate Shrinkage and watch the tool do the math.
- Review your shrinkage rate and see how you stack up against the industry average.
Shrinkage Formula Explained
Shrinkage Rate = ((Starting Inventory + Purchases) − Ending Inventory − Sales) ÷ (Starting Inventory + Purchases) × 100%
- Starting Inventory. Value or unit count at period start.
- Purchases. Stock added during the period.
- Ending Inventory. Value or unit count at period end.
- Sales. Value or units sold.
A rising percentage signals inventory loss—whether from theft, damage, or counting errors. Aim below 1% to stay competitive.
Inventory Shrinkage Example
Imagine you begin with $50,000 in stock, buy $20,000 more, and finish with $60,000. Sales hit $8,000.
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| Variable | Value |
|---|---|
| Starting inventory | 50,000 |
| Purchases | 20,000 |
| Ending inventory | 60,000 |
| Sales | 8,000 |
| Shrinkage rate | ≈ 10% |
A 10% shrinkage means $7,000 vanished. That’s a red flag for tighter controls.
Pro Tips to Cut Shrinkage
Before you dive into software, lock in these process upgrades:
- Schedule cycle counts monthly. Frequent checks catch discrepancies fast.
- Lock down high-risk SKUs. Secure cases or RFID tags deter theft.
- Standardize handling procedures. Minimize damage in transit and restocking.
- Integrate loss-prevention tech. Real-time POS alerts keep you ahead of trends.
Downsize Your Shrinkage
Now that you’ve uncovered your shrinkage rate, close the gaps with the right tools:
- Explore inventory management software
- Check out inventory optimization platforms
- Dive into replenishment tools
- Browse ecommerce inventory solutions
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