What term describes the unaccounted-for reduction in a company's inventory?

The term that describes the unaccounted-for reduction in a company's inventory is shrinkage. In the context of inventory management, shrinkage refers to the loss of inventory that can occur due to various factors such as theft, damage, spoilage, or errors in recording inventory levels. It highlights a discrepancy between the recorded inventory and the actual inventory on hand, indicating that some level of loss or mismanagement has occurred. Shrinkage is a common concern for retailers and businesses that hold significant amounts of physical goods, and it can have a direct impact on profitability.

While theft may contribute to shrinkage, shrinkage encompasses a broader range of issues beyond just theft, including administrative errors and product deterioration. Therefore, shrinkage is a better term to describe the overall phenomenon of unaccounted inventory reductions.