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LSDefine
Simple English definitions for legal terms
shrinkage
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A quick definition of shrinkage:
Shrinkage: When things go missing or get damaged, it's called shrinkage. This means there's less of something than there should be. It can happen to things like toys, food, or clothes. Sometimes people take things without paying for them, or things get broken or spoiled. When this happens, the amount of stuff left is smaller than before, and that's called shrinkage.
A more thorough explanation:
Shrinkage is when a business loses inventory due to theft, breakage, or waste. This means that the amount of inventory the business has is reduced.
For example, if a store has 100 shirts in stock but 10 of them are stolen, the store's inventory has shrunk by 10%. Similarly, if a restaurant has a lot of food waste because they over-prepared, their inventory has shrunk because they can no longer sell that wasted food.
Shrinkage can be a big problem for businesses because it means they are losing money and resources. It's important for businesses to take steps to prevent shrinkage, such as installing security cameras or training employees on proper inventory management.