What Is The Formula Of Shrinkage?
Shrinkage formula is expressed as the difference between the actual output and the standard output, divided by the standard output, multiplied by 100. The formula is mathematical representation of how much percentage of difference exists between the initial plan of an organization and the actual implementation due to various reasons. In manufacturing companies where raw materials are converted into finished goods, shrinkage formula is used to identify the discrepancy between the actual number of products produced and the planned production.