Inventory is dominant in manufacturing industries. It is majorly present in companies where materials are physically handled, managed, stored and distributed. Inventory process is optimised by companies such as Boundless when the existing inventory process does not give desired results.
An audit of the existing inventory process is performed and an alternate process is listed which is effective and efficient.There may be quite a few errors when inventory is performed.
The kinds of errors that occur are as follows:
Incorrect Unit of Measure
This kind of error occurs when you are counting the inventory items using incorrect unit of measure. For example the unit of measure was dozen and you counted the items individually then all the item count is divided by twelve to bring the inventory in the exact unit of measure.
Incorrect Unit Count
This kind of error amounts to valuation error when multiplied by the unit cost. Incorrect unit count is an error emerging from the incorrect count of materials ie physical inaccurate inventory.
Incorrect standard cost
This kind of error occurs when in a standard costing system, each item's cost is noted with its standard cost and not brought to a cost which matches the actual cost.
Incorrect inventory layering
If you use an inventory cost layering system such as First In First Out or Last in Last Out, the system has to assign cost to each item based on the layering. However, in this system errors are possible in case of system inventory and operator errors are possible in case of manual inventory.
This error occurs when you have consignment at retailers and you forget to count it.
The inventory system is set up requiring you to reduce the inventory quantity in one unit of an organisation and increasing the quantity in another unit while transferring inventory in one organisation.If one action is performed in one unit of an organisation but the other isn't then you end up either counting one item twice at two locations or not counting it at all.This kind of error is a transfer imbalance error.
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