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Physical Inventory and Cycle Counting
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    Cycle Counting
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Cost Justification

Additional Costs Savings
Cost of tag/form used for counting Cost of tag/form ____________ x # of forms _________ = $__________
Clerical cost of tag/form preparation Average Clerical Cost/Hour $________ x # of hours to prepare materials ________ x # of clerks required for preparation materials________ = $__________
Clerical cost of entering inventory tags Average Clerical Cost/Hour $________ x # of hours to enter count tags/forms ________ x # of clerks required for entry of tags/forms__________ = $__________
Reduction of the time necessary to perform the count as a result of the reduction in the number of employees needed in the count group and the elimination of the time spent writing tags. -- average time reduction is 65% Average total time to perform count________ x average hourly cost of personnel on hand for the count $__________ = $__________
Reduction of the time associated with the "runners" used to go back out on the floor to clarify the information written on tags that is indecipherable. Average cost/hour of runners $__________ x number of runners used _________ x number of hours worked __________ = $__________
Reduction of the time necessary to perform audit counts ordered selectively by the auditors Average time to perform audit counts________ x average hourly cost of personnel on hand for the audit counts $__________ = Total cost of audit count $______________ x 65% = $__________
Reduction in inventory auditor time due to overall reduction in inventory count time. Auditor cost is reduced in accordance with the time saved during the counting process. Average auditor cost per hour during count time $_________ x average number of hours to perform the count ________ = Total cost of auditors during count $ _________ x 65% = $__________
Reduction of plant downtime due to overall count time reduction # of hours down during counting activity_____________ x Average hourly dollar output $___________ = Total value of plant downtime $____________ x 65% = $__________
Total Savings = $__________

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