I wonder to what degree is shrinkage a compounding factor. I used to work at an outdoor retailer where we only did inventory once a year, and by the end of the

I wonder to what degree is shrinkage a compounding factor. I used to work at an outdoor retailer where we only did inventory once a year, and by the end of the year the computer inventory would differ from actual inventory by an order of magnitude, simply due to the fact that things get lost, damaged, stolen, etc... and don't get marked as such in the computer. If you have enough backstock, this isn't a huge problem (I think most estimates put retail shrinkage at less than 5%). But if you are using a just-in-time stocking approach, those effects could quickly compound until you have nothing left on the shelf and no more inventory on the way.