If the inventory records of a retailer report that 3,261 units of Product X are on hand?

All options seems possible. But we should not forget about the fact that there might be a case of missing sales entry, double accounting of purchase transaction, employee intentionally not recording sales in order to take the proceeding with him/her, error during stock reconciliation from a previous period.

The answer based on two sides a) Shoplifting and b) Employee theft.

This is a tricky question. Different organization with their controlling system and procedures may have different answers.

 

(a)    Shoplifting – it may be straight forward reason of this shrinkage. As inventory records of product X only shows purchase and sales. Any shoplifting could not be recorded until found in physical count or any security system (e.g. CCTV cameras recording).

(b)   Employee Theft – Same as option (a)

(c)    Damages – if company’s policy is to count only item in saleable condition in physical count, damage goods also be a reason of shrinkage.

(d)   Obsolesce – Same as (d)

(e)   All of them – if all options are applicable

It might be due to the cause of options (a) and (b) i think.

It cannot be (c) and (d) as damaged and obsolete doesn't mean it cannot count as physical presence of the item. there fore (e) - all of them is not the answer.

Hence the correct answers  i deduce with the above analogy for this question is both (a) and (b).

Experts please correct me if i'm wrong in understanding the question. Thanks.

 

At first, not to jump any conclusions at all but recounting that it may due to negligence or I would go to due to damage or loss that is why there is a shrinkage of13 units.

e) all of the above. The retail item is subject to shoplifting, theft and damage.

I think option A and B is much close to the real reason of this missing in inventory . physical count process shoud count every thing even for the damages .

d)obsolescence

Remaining13 units are in uder process of passing out of use or usefulness or becoming obsolete. Becoming reduced during the course of evolution; vestigial or nearly vestigial.Used of an organ or other part of an organism.

I think the correct answer would be A,B and D.

C,it is obsolescence, beca

I would say (a) and (b).

(c) should be recorded(d) Then all inventory item should be so and not a cause of inventory gap...more a matter of resource to be taken in account or not by MRP run.

 

We may also consider;

* Gap coming from supplier (incoming receipt not properly checked)

* Picking error from vendor/customer service staff