Inventory Units
What Unit Should You Count By?
In setting up your inventory count sheets, it is important to identify what unit each product will be counted as; Each or Piece, Case or by the Pound. This will be important because this is the unit value you will use to calculate the total value of the product on-hand.
I prefer to count using the smallest unit possible that makes sense to get the most accurate values. For example, you are counting shredded mozzarella cheese that comes packed 6-5lb bags per case. The case cost is $112.50. You can count by the case, bag or pound, each would give you the same value if accurately extended.
Counting by the case is the most time-efficient as long as you are counting full cases. You can also count by the pound, but then you will either need to count cases or the individual bags and then calculate how many pounds you have.
What Unit Should I Use to Count?
Using the example of shredded cheese packed in a 30 lb case of 6 - 5 lb bags, you can choose to count by the case, bag or pound, as long as you properly calculate the value for that unit.
Cost per Case - $112.50
Cost per 5 lb Bag - $18.75
Cost per Pound - $3.75 per Pound
You want to count in the smallest, most sensible unit. In this situation, it would make most sense to count by the 5-lb bag
Typical Units for Counting
Dry Goods / Canned Goods - Each / Piece
Meats / Poultry / Seafood - Pound
Block Cheeses - Pound
Packaged Goods - Each / Bag
Produce - Case / Pound / Each
Bread - Each / Pack
A product stored in more than one location may be counted in different units. A product in the storeroom in an unopened case may be counted by the case but may be counted by the individual piece, pound or package when in use. Such an example might be cases of soda in the storeroom, but individual cans or bottles in a display cooler.
Since the product has been removed from the case and is stored on the shelf in the bags, you determine that you are going to count by the bag to make the counting easier and quicker.
You will then need to breakdown the cost for each 5lb bag. $112.50 Case Cost ÷ 6 Bags per Case = $18.75 per Bag. By noting on your inventory count sheets the unit in which you will be using for extending inventory values, you will be able to accurately calculate the dollar value for the product that you have in inventory.
Counting by one unit and using the dollar value of another unit to calculate the value of the product on hand can have a major impact on the accuracy of your inventory.