Estimating Cycle Count Requirements

How Many Counts Will You Need?

The only sure way to know is to start counting and observe the results. There are too many variables, too little reliable data and too much effect from selection strategies to accurately predict the required counts per day. It also depends on resources and how fast you want results.

Figure 17 contains a wealth of information from very simple data. Every Inventory Accuracy program should have something similar to monitor progress and identify problems early. However, the data for such a chart is only available after the program is operating.

In spite of the difficulties and inaccuracies, we still need some sort of advance estimate to design the program and procure resources. One method is to segregate items into the usual ABC classes and guess at the annual count frequency for each class. The table shows typical ranges.

Another approach is to simulate the system with a simple spreadsheet based on statistical theory. Our Cycle Count Estimator uses both approaches.

Strategos Cycle Count Estimator

Our Cycle Count Estimator takes the form of an Excel worksheet. It starts with simple information from past physical inventories and displays Inventory Record Accuracy for given cycle count frequencies for two-years. Up to five scenarios on each display allow comparison of different cycle count rates, Error Creation Rates or count selection strategies. Since it does not account for targeting strategies such as zero-balance counts, actual results are likely to be better than predicted.

Figure 16 Data Inputs for Cycle Count Estimator