Read the following article and answer the questions that follow.

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?

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Controlling inventory through new technology Inventory shrinkage can occur due to spoilage, obsolescence or theft. Spoilage is more common when dealing with inventory with a short shelf life such as food. As food nears its use-by date, it is often marked down for sale before it loses all of its value. Obsolescence commonly occurs as a result of changes in technology. As the rate of change in technology accelerates exponentially, this is increas- ingly becoming a problem, particularly in industries where inventory is managed and recorded electron- ically. Clothing fashion is another area where inventory may lose value due to obsolescence, or change of preference amongst consumers. And customer and staff theft of inventory represents a major cost to retailers. There are many ways to combat shoplifting. At JB Hi-Fi stores, for example, a security guard at the door checks your bags as you leave the store. However, a technologically based approach to deterring the shoplifter, radio-frequency identification (RFID), may in time have a more effective impact on this problem. Not only does RFID make it easier to detect shoplifting by customers but it makes it easier to manage inventory. Inventory can simply be scanned in at a retail store and scanned out at the checkout. RFIDS can be read from a distance, so whether the goods are going out through the front door with a customer or out through the back door with an employee the retailer will know immediately (Baker 2013). As this technology becomes increasingly cheaper, its use is spreading, which could help overcome the 25% of shrinkage due to employee theft.