From: Stan Hilliard, CQE, CQA
Date: 21 Jun 1999
Time: 11:06:13
One valuable application is to use a sampling plan to decide when to conduct a total inventory.
You would examine a small sample of inventory categories, selected from the larger population of categories. The sampled categories would then be examined physically and compared to book value for accuracy.
You use the acceptance rule of the sampling plan to decide whether to accept the total population of categories as accurate (until the next time period), or to reject the records as inaccurate and re-inventory the total population of categories to update the book record.
This process can be very economical because the total inventory is conducted when, and only when, the previous inventory record becomes out of date.
Sincerely, Stan Hilliard