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A matter that has received scant attention in the literature of operations research is the role of discrepancies between physical stocks and stocks of record in a supply operation. Discrepancies not only exert a deleterious effect on the performance of the supply function, but may have a serious effect on the realization of benefits to be derived from implementation of theoretically optimal methods of inventory control and procurement or production scheduling. The present paper reports on a case study of discrepancies and their causes in a supply facility of an agency of the Federal Government. Contrary to the general expectation that the massive and complex paper work system connected with processing of issues and receipts was the principal source of discrepancies, it was possible to determine that about 80 per cent of the discrepancies were caused by the discrepancy-correcting procedures themselves. As a result two principal targets for further study are clearly delineated, (1) the inventorying process and (2) the stock balance adjustment procedures. Even on the basis of preliminary study some ameliorating recommendations were possible.

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