How can you determine inventory shrinkage?

Determining inventory shrinkage involves assessing the difference between the expected inventory levels and the actual inventory levels present. This difference can be attributed to various factors, including theft, damage, or administrative errors. When you subtract the cost of goods in inventory from the expected costs, you gain insight into what is missing from your inventory that should have been there. This method provides a clear numerical value representing shrinkage and allows for effective tracking and management.

While counting outdated products focuses on specific stock, it does not comprehensively address the overall shrinkage. Tracking sales of popular items can help identify trends in demand but does not measure inventory discrepancies. Customer return rates may inform inventory levels but do not directly identify or quantify shrinkage in stock. Therefore, the correct method for determining inventory shrinkage is through the subtraction of actual costs from expected costs, providing a systematic approach to identifying discrepancies.