The Retail Inventory Method estimates the ending inventory value by using the cost-to-retail price ratio. It is often used in retail environments to approximate inventory without physical counts. RIM is useful for interim financial reporting but is less precise than perpetual inventory systems. It can distort inventory values during heavy discounting or price fluctuation periods. In optimization, reliance on RIM is reduced in favor of more accurate, data-driven approaches. However, it remains a useful estimation tool when detailed systems are not in place, especially for smaller or legacy retailers.
