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Gary Abbott, the buyer for The Gift Shop, received the shortage report at the end of the Fall season. This report revealed that the overall department shortage for this six-month period was 1.3%, or 0.2% less than the previous season. Mr. Abbott was delighted to notice this decline in shortage, small as it was. As he analyzed the results of the individual stores, he found that Store 01 had a shortage of 1.2% while Store 09 had a 5.0% shortage.

Because the store uses a bar code scanning system to take inventory, the accuracy of the amount of inventory taken is ensured. However, Mr. Abbott reviews the figures for each store before trying to determine the causes of the vast shortage differences. He refers to the following data:

	Store 01			Store 09
	Cost	Retail	MU%	Cost	Retail	MU%
Opening Inventory		$450,000	52%		$300000	52%
Purchases (including freight)	$142500	$300000		$71250	$150000
Reductions		$7000			$4000
Sales		$375000			$150000
Shortages		1.2%			5%

Store 01 had a physical inventory figure of $363,500, and Store 09s physical count was $288,500. Other differences between these two stores are:

1. Store 01 is one of the oldest existing branches of the chain, while Store 09 is the newest branch, having been opened one year ago.

2. Store 01 is located in a high-income area, while Store 09 is in a medium-income-bracket location.

3. Store 01 is one of the most profitable units of the chain, and because of its high productivity, it enjoys a commensurate sales force.

4. Since 09 is so young, it has been staffed with a minimum permanent sales organization supplemented by part-time employees.

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