perpetual inventory

Definition

An inventory tracking system that continuously updates quantities with each transaction in real-time, as opposed to counting everything periodically and hoping nothing walked away. It requires technology, discipline, and faith that employees actually scan items.

Example Usage

The perpetual inventory system showed 500 units in stock, though the physical count revealed 347 and a suspiciously well-stocked employee breakroom.

Origin

Became practical with computerization in the 1970s-80s; before that, continuous tracking was theoretically possible but practically masochistic.

Fun Fact

Despite sophisticated perpetual systems, retailers still conduct physical counts because shrinkage (theft, loss, damage) ensures the computer is always optimistically wrong.

Source: Inventory accounting terminology

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💰 Finance / Accounting

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