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Ghost Inventory

Ghost inventory, also referred to as phantom inventory, describes goods that an inventory accounting system considers to be on-hand at a storage location, but are not actually available.

This could be caused by items being moved without recording the change in the inventory accounting system, breakage, theft, data entry errors or deliberate fraud. The resulting discrepancy between the online inventory balance and physical availability can delay automated reordering and lead to out-of-stock incidents.

A number of techniques have been used to correct ghost inventory problems, including physical cycle counts, tagging of items and statistical modelling of ghost inventory conditions.

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