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certain floor and ceiling percentage limitations that were
established by Wal-Mart's senior management, and that are
discussed further below. After Wal-Mart took a second inventory
at the store, it computed the shrinkage rate for that store
similarly to the method described above, except that it used the
shrinkage as verified by both the first and second inventories,
and it used the sales for the period starting with the date the
store opened and ending on the date of the second inventory. The
floor and ceiling limitations described below were also applied
to this rate. After Wal-Mart took a third inventory at the
store, it computed a shrinkage rate for that store in a fashion
similar to that of the first 2 years, except that it used the
shrinkage as verified by the first, second, and third
inventories, and it used the sales for the period commencing with
the date the store opened and ending on the date of the third
inventory. This shrinkage rate, as computed, was subjected to
the floor and ceiling limitations described below.
After Wal-Mart took the fourth and each subsequent
inventory, the retail shrinkage rate was based on a rolling
average of the historical shrinkage over the last three
inventories of the store. The rate was computed by dividing the
amount of shrinkage at retail, as verified by the current
inventory and the preceding two inventories, by the sales for the
period commencing with the date of the third preceding inventory
and ending on the current inventory date. This shrinkage rate,
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