The Inventory Price Difference is a metric in the stock inventory tool that reflects the change in total inventory value after corrections have been applied. This article explains how the value is calculated and the components involved.
Formula Overview
The Inventory Price Difference is calculated using the following formula:
INVENTORY_PRICE_DIFFERENCE = TOTAL_CORRECTED_VALUE - TOTAL_ORIGINAL_VALUE
Components of the Calculation
1. Total Corrected Value
The Total Corrected Value represents the updated value of inventory after corrections (such as stock adjustments or recounts) have been applied.
TOTAL_CORRECTED_VALUE = SUM(QUANTITY_CORRECTED_FW * STOCK_ITEM_VALUE_FW)
QUANTITY_CORRECTED_FW: The corrected quantity of each stock item
STOCK_ITEM_VALUE_FW: The unit value of the stock item
This calculation sums the value of all items based on their corrected quantities.
2. Total Original Value
The Total Original Value represents the inventory value before any corrections were made.
TOTAL_ORIGINAL_VALUE = SUM(QUANTITY_INITIAL_FW * STOCK_ITEM_VALUE_FW)
QUANTITY_INITIAL_FW: The originally recorded quantity of each stock item
STOCK_ITEM_VALUE_FW: The unit value of the stock item (same as above)
This provides the baseline value for comparison.
Interpretation
A positive Inventory Price Difference indicates an increase in inventory value after corrections
A negative value indicates a decrease
A value of zero means no net change between the original and corrected inventory