shrinkage-n; 2 Senses

Sense Number 1: the process of decreasing in size or quantity

Commentary: SHRINKAGE[+process][+decreasing][+size] [+quantity][+amount][+loss][+resulting]
NOTE: nominalization: the shrinkage of the fabric -> the fabric shrinks

Mary didn't allow for shrinkage of the fabric when she hemmed the curtains.
Due to shrinkage of their funding, the institute had to cancel one of its conferences this year.
The cookbook described the shrinkage of the souffle after it cooled.
You can expect a quarter-inch shrinkage after you wash this shirt.

WordNet 3.0 Sense Numbers: 1, 2

Sense Number 2: loss of merchandise through theft

Commentary: SHRINKAGE[+activity][+theft][+merchandise] [+quantity][+amount][+merchandise][+shoplifted]
NOTE: refers specifically to shoplifted merchandise

These losses are due to shrinkage.
You have to factor in shrinkage when determining what your profits are.
What is the inventory shrinkage in their business?

WordNet 3.0 Sense Numbers: 3