You can count and compare actual, on-hand inventory balances with system-maintained quantities using either of two counting methods:

In each method, you count inventory by site, location, item, and lot/serial number. Cycle counting involves counting groups of items on a regular or cyclic schedule. A physical count involves counting all items, usually once a year.

During cycle counting, you enter manual count figures in the system. The system then compares the manual count figures with its figures. If there are discrepancies, the system checks the error tolerances defined in Inventory Control. If a count figure is within tolerance, it is accepted and the system figure is updated. If a count figure is not within tolerance, the item in question must be recounted. The system accepts recount quantities that are out of tolerance.