Shrinkage refers to
a. the declining number of small privately owned retail stores due to economic hard
times.
b. breakage, theft, and fraud by customers and employees.
c. the percentage of inventory that is damaged or unsalable because of product failure or
problems in shipping.
d. loss of profits in clothing items that are returned because of inferior materials.
e. polycarbonate packaging that encases products with a tamper-resistant plastic seal.
Answer:
Recently, a project team for Cosco, the world’s largest children’s products company,
developed a high chair that could be used as an infant feeding seat, a youth chair, a play
chair, a booster chair, and when reclined, an infant bed. Its design could be made and
sold for $49. The marketing manager, in consultation with other middle managers,
decided to have the prototypes checked out by Cosco employees who had small
children. This was the only product testing performed on the product. Before Cosco
pulled the unsafe chair from the market, several children were injured and some died as
a result of using the chair. Cosco was charged with being unconcerned about
consumers’ right to