Abstract
Various execution errors and factors can create a difference between the expected and the effective physical and information flows within an inventory system. We consider a finite horizon, single-stage, single-product periodic-review inventory in which inventory records are inaccurate. We assume that inventory inaccuracies are introduced by shrinkage type errors that occur within the store. We propose three ways permitting to manage the inventory system based on the information we have on shrinkage errors. The comparison between the three approaches permits us to analyse the impact of shrinkage errors and the value of the Radio Frequency Identification (RFID) technology on the inventory system.