Cycle Counts

UNDERSTANDING CYCLE COUNTS

OPERATIONS MANAGEMENT

TRA 2152

Term/Year 20122 Session C-8

Reference: 361013

Submitted by

Page. E. Lutchman

Introduction

The intent of this paper is to define cycle counting, the various types, advantages and disadvantages of cycle counting for the novice. A cycle count or cycle counting is described as is a popular inventory management procedure and / or counting solution in which a small subset of specific items within the warehouse are counted daily without having to count the entire inventory on any given day.

The primary focus of cycle counting is threefold. Firstly, cycle counting focuses on fast moving items. Secondly, cycle counting focuses on items that are critical to the business processes. Lastly, cycle counting provides inventory accuracy.

Cycle counting has two major advantages:

1. It is less disruptive to daily operations than traditional physical inventory, and

2. It does not require the facility to shut down or cease operation.

The disadvantages of cycle counting are discussed later in this paper.

Types of Cycle Counting

According to resources used in writing this paper, there are three types of cycle counting solutions:

* ABC Analysis

* Control Group

* Random Sample

ABC Cycle Counting

Described as an alternative to random sample counting, this method uses the Pareto principle as its basis. Prospective items are first identified A, B or C items usually thru the utilization of an inventory control software. Once assigned a category, the number of times each category should be counted is determined. For example items having a category of “A”, the highest sales value are counted more frequently than items that have low sales or a category of “C”.

Figure 1. Image retrieved from http://www.leadershipvibe.net/the-pareto-principle-any-good

Control Group Cycle Counting

Control group cycle counting typically involves, the use of a small test control group to determine which method will...