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During the years in issue, the incidence of shrinkage
factors varied among stores, among departments within stores, and
among KMAs. Overages were, on occasion, recorded by individual
stores and, in some years, on a net basis by entire KMAs, but
never for the KMAs together. No accrual was made to reflect an
expectation of overage. From 1984 through 1987, in the face of
recurring overages, the Michigan KMA did not make shrinkage
accruals.
The management of each KMA determined shrinkage accrual
rates to be used throughout that KMA. Judgment played a large
role in determining shrinkage accrual rates. Factors that would
be taken into account included experience with shrinkage factors,
store sizes, merchandising techniques, regional differences, and
recent shrinkage trends. A separate percentage rate was
determined for each department for which a shrinkage accrual was
made.
D. Physical Inventories
From 1984 through 1992, the KFS division conducted an
average of 2.3 physical inventories a year in each store.
III. Florida Choice
Florida Choice, although a division of Superx, was operated
as if it were a part of the KFS division. During the years in
issue, Florida Choice’s chain of supermarkets grew from 22 to
30 stores.
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Last modified: May 25, 2011