Read the following article and answer the questions that follow.

Fresh approach to curb shoplifting

According to the most recent Global Retail Theft Barometer (GRTB) put out by Britain’s Centre for Retail Research, employee theft accounted for 35 per cent, or $41.7 billion, of global shrinkage at retail stores in 2011. Customer theft was responsible for 43 per cent, or $51.5 billion; the rest was attributable to internal error (for example, incorrect price-tagging) and vendor fraud.

The Centre for Retail Research estimates Australia’s retail shrinkage amounted to just over $2 billion in 2011, equal to 1.4 per cent of retail sales. This placed Australia 18th internationally and fourth of developed countries behind the US, Canada and Belgium. Globally, department stores, sellers of auto parts and clothing retailers have the highest rates of shrinkage.

How to combat shrinkage

In a small greengrocers, I've seen a little sign above the grapes bin informing consumers that trying one from the bunch will cost them 20c each. Good luck enforcing that. Larger retailers are combining human security and technology. Some of these solutions are very conspicuous, such as the security guards minding exits of JB Hi-Fi stores (a retailer that has been notably successful in keeping down shrinkage in a sector that is naturally predisposed to it).

Foremost among technological fixes is radio-frequency identification (RFID), which is being extensively trialled by global retailers such as Walmart and Macy’s. It is used mainly for improving inventory management and accuracy. This also makes it a key enabler of omni-channel retailing, because when retailers know what their stores stock, they can systematically use it to fill online orders.

RFID involves attaching a small chip or ‘tag’ to each item of merchandise that acts as its unique identifier. These tags are readable from hand-held or fixed scanners using radio frequencies.

The chips are analogous to barcodes but work better, because they can be read from a distance and do not need to be lined up precisely with the reading device. As stolen merchandise leaves the store, RFID can make the retailer aware of it in real time. This makes it useful to combat direct theft by employees as well as by customers.

The widespread deployment of RFID has been held back largely by of the cost of the chips, which have now come down below 10c.


Required

A. How would inventory shrinkage be accounted for?

B. Which inventory system would be most useful in determining inventory shrinkage and why?

C. What type of inventory system would be used when RFIDs are used and why?

D. How would the use of RFIDs aid in doing a physical stocktake?

E.  RFIDs seem to be a good solution to inventory shrinkage. Would it always be appropriate to use RFIDs to keep track of inventory?