In this article, you will learn what is the return goods per units sold [RGUS] and how to measure it for lean manufacturing activities.
Return Goods per Units Sold [RGUS] Meaning
Is a measure of the magnitude of the amount of product returned by the customer taking previously purchased merchandise back to the retailer, and in turn receiving a refund in the original form of payment, exchange for another item (identical or different), or store credit.
A return good is the act of a customer taking previously purchased product back to the manufacturer or supplier, and in turn receiving a refund in the original form of payment, exchange for another item (identical or different), or a store credit.
A return good occurs when the buyer of the product, sends these goods back to the seller.
Many return goods affects adversely the profitability of a business, so this metric should be closely monitored.
The formula to calculate the percent of rcturn goods per units sold is = (number of units returned / number of units sold) x 100.
5 Factors That May Trigger and Promote Return Goods:
There are a great number of reasons to receive returns goods, such as:
3 Main Reasons To Receive Return Goods:
Exist many reasons why customers may wish to return a product. These include a change of one’s mind (buyer’s remorse), quality of the product, personal dissatisfaction, or a mistaken purchase of the wrong product.
In facts, it can be attributable to following three reasons:
Some customers buy the product to “borrow” the merchandise at no charge.
These fraudulent customers buy the product for temporary use, then returns it when finished.
This type of fraud is called “wardrobing”.
Options to Compensate for Return Goods
The seller has several options for compensating the buyer for any returned goods, which include:
When the buyer sends a purchase return, it can be either as a credit to its inventory account (if there are few such transactions) or to a purchase returns account (if management wants to segregate this information for further analysis). The offsetting debit is to the accounts payable account.
A purchase return is usually authorized under a return merchandise authorization (RMA) that is issued to the buyer by the seller. When the buyer packages the goods for return to the seller, it marks the RMA number on the outside of the package, which the seller’s receiving department matches against its list of authorized and outstanding RMA numbers before accepting the receipt. If there is no RMA number, then the delivery will be rejected.
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REFERENCES: Return Goods.