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by Superx). Dr. Bates concludes that respondent’s method is less
accurate than that used by Superx.
E. Respondent's Expert Testimony
Respondent offered rebuttal expert testimony of Donald M.
Roberts, Ph.D., a professor of decision and information sciences
at the University of Illinois. Dr. Roberts had been asked to
examine the statistical basis of Dr. Bates’ conclusion that the
correlation between sales and shrinkage for the KFS division for
the period 1984 through 1992 was 0.91. Dr. Roberts confirmed
that the correlation was 0.91. In his rebuttal report, Dr.
Roberts does not offer any criticism of Dr. Bates’ opinion that
losses from shrinkage factors occur during the physical-to-
yearend period or undermine Dr. Bates' shrinkage accrual accuracy
analysis. Dr. Roberts’ own opinion is that the correlation
between sales and shrinkage is generally low and that sales do
not provide a reasonable basis for estimating inventory
shrinkage. Dr. Roberts had been asked to examine sales and
shrinkage only for the KFS division. He examined data at the
department level within stores in the KMAs. He computed
correlations for each department for the years 1984, 1985, and
1986. He also computed correlations for each department within
each KMA for the period 1984 through 1992.
Petitioner offered additional expert testimony of Dr. Bates
in rebuttal to Dr. Roberts’ opinion that the correlation between
sales and shrinkage is generally low and that sales do not
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