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Negative Inventory: What You Don't Know May Make Things Worse

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Executive Summary

People can get rather excited over negative inventory because the concept seems so ridiculous. Surprisingly, negative inventory is a very common occurrence and may even be a "normal" part of some processes. Though negative inventory balances certainly reflect some type of problem, it should not be assumed that you must manually adjust inventory up to "Fix it." In many cases, negative inventory is simply a timing issue. For example, if materials are coming right out of manufacturing and into an outbound shipment, the shipment transaction may be completed before the production-reporting transaction if the production run is still in process.

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