Timal inventory level management must weigh the

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timal inventory level, management must weigh the benefits of reduced inventory against the potential lost sales caused by stock-outs. Related exercise material: BE6-9, E6-13, E6-14, and DO IT! 6-4. Be sure to read ALL ABOUT YOU: Employee Theft—An Inside Job on page 268 for information on how topics in this chapter apply to your per- sonal life. * PDF Watermark Remover DEMO : Purchase from to remove the watermark
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About the Numbers * all about Y U * all about Y U Employee Theft—An Inside Job * Source: Data from 2003 National Retail Security Survey, University of Florida. Some Facts * What Do You Think? * Where Did the Inventory Go? Shoplifting, 32% Employee theft, 48% Administrative error and vendor fraud, 20% * The National Food Service Security Council estimates that employee theft costs U.S. restaurants $15 billion to $25 billion annually. * The average supermarket has inventory shrinkage losses of 2.28% of sales, or $224,808 per year. Average net profit is only 1.1% of sales, so inventory shrinkage is twice the level of profits. * Fear of getting caught and being fired ranks among one of the top reasons employees give, in surveys of reasons why they do not steal from their employer. * Tips from customers are the No. 1 way that many stores catch thieving employees. * The average employee caught stealing costs his or her company $1,341, while the average loss from a shoplifting incident is only $207. Suppose you own a number of wine shops selling mid-level as well as expen- sive bottled wine. You have been experiencing significant losses from theft at your stores. You suspect that it is a combination of both employee and customer theft. Assuming that it would be cost-effective, would you install video cameras to reduce both employee theft and customer theft? YES: Most employees and customers are honest. However, some will steal if given the opportunity. Management has a responsibility to employ reasonable, cost-effective approaches to safeguard company assets. NO: The use of video technology to monitor employees and customers sends a message of distrust. You run the risk of alienating your employees (who may well figure out a way around the cameras anyway). Cameras might also reduce the welcoming atmosphere for your customers, who might find the cameras offensive. Sources: Bob Ingram, “Shrink Has Shrunk,” Supermarket Business , September 15, 2000, p. 65; Lisa Bertagnoli, “Wrapping up Shrink,” Restaurants & Institutions , May 1, 2005, pp. 89–90; Naomi R. Kooker, “Taking Aim at Crime,” Nation’s Restaurant News , May 22, 2000, pp. 114–118. The authors’ comments on this situation appear on page 298. I Inventory theft is a huge problem for many businesses. Few employees would be as bold as the character in a Johnny Cash song, who while working on an assembly line in Detroit, steals an entire car, one piece at a time, over the course of many years ( at_a_time.html) . Nonetheless, at most companies, employees are the primary culprits. While you might think that a free pizza or steak at the end of your
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