Abnormal (Inventory) Shrinkage - Explained
What is Abnormal Inventory Shrinkage?
Written by J. Mance Gordon
Updated at April 21st, 2024
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What is Abnormal Shrinkage?
Inventory shrinkage, or contraction, is used to describe inventory loss. For instance, if a retailer's inventory records report that there are 3,261 units of Product X available, but a physical count shows that only 3,248 are available, then an inventory shrinkage of 13 units exists.
What is tracking Abnormal (Inventory) Shrinkage Important?
Inventory shrinkiage may occur for any number of reasons, including poor manufacturing quality (disposal), loss during transportation, and theft.