Even though the manufacturer claimed a significant loss from its raw ingredient purchases, MDD confirmed the specific recalled batches and determined that only a portion of these ingredients were involved in the recall. We also concluded that the ingredients had been consumed as part of the manufacturing process and then converted to finished goods. As such, the manufacturer had no basis for this aspect of the claim because it would have been a duplication with the claimed finished goods and customer chargebacks.
MDD used various production and shipment documentation to analyze and confirm the finished goods cases produced, including those cases that were either shipped to external warehouses / customers or still in stock at the plant. After finishing our analysis, we determined that the claimed on-hand quantities were reasonable, both at the plant and at the external warehouses. The manufacturer claimed the warehouse inventory quantities at sales value.
We also analyzed purchase orders and sales invoices supporting cut orders (reduction in quantities ordered due to occurrence). Although the cut orders were reasonably supported, we determined that they posed a potential duplication issue with the claim of the finished goods since the manufacturer would have filled the cut orders with the same finished goods being claimed elsewhere.
Although the manufacturer presented the claim for lost inventory and cut orders at sales value, the combined sales loss could not exceed the total sales value lost for the same products. This meant that MDD needed to perform an analysis to verify the total sales loss sustained from the affected products.