Machines and Accessories Report No. 98-11

Date: November 13, 1998

Subject: Loss Rate for C-1 Cassette Book Machines (CBMs)

Some machine lending agencies (MLAs) have been reporting high
percentages of their C-1 cassette book machines (CBMs) as
location unknown (loss status), according to firms auditing
NLS machines during the past two years.

The auditors asked that NLS establish an acceptable loss rate
for C-1s and that we monitor monthly machine activity.  NLS
has been asked to work with any machine lending agencies whose
loss rate exceeded the established limit.  The acceptable loss
rate for C-1s equals one half of one percent of the MLA's net
inventory per month, or six percent per year.  The loss rate
is calculated by taking the total number of C-1s reported as
lost, stolen, or location unknown in a given month and
dividing it by the monthly net C-1 inventory.

Beginning with reports for January 1999 activity, NLS will
contact MLAs whose losses exceed the established limit.  NLS
recognizes that there are legitimate inventory activities that
would generate loss rates that will occasionally exceed the

To reduce loss rate, it is recommended that prior to
classifying any C-1s in the location unknown status, an
administrative and physical search for the equipment be
conducted by the MLA.  Further, experience has shown that
following up on inactive patrons within six months helps to
reduce machine loss.

For further information contact:

James Miller
Equipment Control Officer
Telephone (202) 707-9321