Inventory Management for my business

[browndudley]

This is actually for my business. I’m not a student. I have no idea if probability can be applied to this or not - just trying to have a tool to better manage my inventory.

I own a clothing store. We receive inventory in every single day. Each item receives its own unique SKU that is tagged to the clothing. Occasionally there is a glitch (or employee error) and SKUs will be created for items that never existed. I can run a report that will show me which SKUs have not sold and when they were “received” into inventory (I put received in quotes b/c some of the SKUs could be the phantom SKUs). Since I know what date they are theoretically received into inventory I can run another report showing me how many other like items were received into inventory that same week and out of those how many have sold. So, for example, say I run my report and see that there is a T-shirt that was received into inventory on 1/5/2009 that hasn’t sold. I can also see that for the week surrounding that date (1/2/2009 to 1/8/2009) I received a total of 300 T-shirts (299 T-shirts outside of the T-shirt in question) out of which 250 have sold. Is there a probability that the T-shirt in question is a phantom T-shirt? Is it always going to 50/50 because it either is or isn’t? If it is a phantom T-shirt and the rest are real, then eventually for that time frame I’ll have 299 that have sold out of the 300. Would that not narrow down the probability that that T-shirt is phantom and never existed?

Next, to take it one step further – assuming probability applies to the above – can I a probability be derived for a group of items that my report shows that haven’t sold for a given day. Let's say I show that on that same date I’m showing that not just a T-shirt received on that date hasn’t sold but it’s a pair of jeans and a long sleeve shirt as well. Here is the data (would have put it in a table but can't figure out to make a table in this forum ):

Item: T-shirt
Recieved: 1/5/09
Like Items Received During Same Week: 300
Like Items that have sold: 250

Item: Pair of Jeans
Recieved: 1/5/09
Like Items Received During Same Week: 500
Like Items that have sold: 480

Item: Logn Sleeve Shirt
Recieved: 1/5/09
Like Items Received During Same Week: 200
Like Items that have sold: 100

Is there a probability that all these items are phantom items as a group?

Thanks!

 

[Valkarie]

Yes, it is possible to calculate a probability for a group of items that have not sold. To do this, you would need to calculate the probability that each item is a phantom item, then multiply those probabilities together to get the probability that all of them are phantom items. In this case, the probability that the T-shirt is a phantom item is 250/300 or 83.3%, the probability that the pair of jeans is a phantom item is 20/500 or 4%, and the probability that the long sleeve shirt is a phantom item is 100/200 or 50%. Multiplying these probabilities together (83.3% * 4% * 50%) gives us a probability of 1.67% that all three items are phantom items.