What is cycle counting?

What is cycle counting?

• A. A full physical inventory conducted yearly.
• B. A method for forecasting demand.
• C. A continuous inventory accuracy method where a subset of items is counted regularly to reconcile records.
• D. A process for labeling pallets.

Answer: (C)

Cycle counting is an ongoing method for keeping inventory records accurate by regularly counting a rotating subset of items and reconciling those counts with what the system shows. Instead of stopping operations for a full physical inventory, this approach continuously checks stock in smaller, scheduled cycles. Items are often prioritized by importance or movement (high-value or high-turnover items counted more frequently), so discrepancies are found and corrected sooner. When a count reveals a difference, the cause—data entry error, receiving/shipping mistake, or actual shrinkage—is investigated and the records updated accordingly. The result is better inventory accuracy, improved replenishment decisions, and less disruption to daily operations. A full yearly physical inventory is not cycle counting; forecasting demand is a separate function; labeling pallets is unrelated to inventory counting.

Cycle counting is an ongoing method for keeping inventory records accurate by regularly counting a rotating subset of items and reconciling those counts with what the system shows. Instead of stopping operations for a full physical inventory, this approach continuously checks stock in smaller, scheduled cycles. Items are often prioritized by importance or movement (high-value or high-turnover items counted more frequently), so discrepancies are found and corrected sooner. When a count reveals a difference, the cause—data entry error, receiving/shipping mistake, or actual shrinkage—is investigated and the records updated accordingly. The result is better inventory accuracy, improved replenishment decisions, and less disruption to daily operations. A full yearly physical inventory is not cycle counting; forecasting demand is a separate function; labeling pallets is unrelated to inventory counting.