THE NUCLEAR INDUSTRY MUST DEAL WITH INVENTORY PROBLEMS WHETHER OR NOT THE NON-PROLIFERATION TREATY OR THE INTERNATIONAL ATOMIC ENERGY AGENCY SAFEGUARDS ARE APPLICABLE. IN MOST NUCLEAR OPERATIONS THE INVESTMENT IN FUEL INVENTORIES IS LARGE AND THE VALUE OF THE MATERIALS IS HIGH. MOREOVER, THE POTENTIAL USE OF SPECIAL FISSIONABLE MATERIAL FOR THE MANUFACTURE OF WEAPONS JUSTIFIES STRINGENT CONTROLS. THE TECHNIQUES USED TO PROTECT NUCLEAR MATERIAL ARE THOSE GENERALLY USED TO CONTROL VALUABLE MATERIALS IN OTHER INDUSTRIES. QUANTITIES OF MATERIAL ARE MEASURED UPON RECEIPT AND SHIPMENT, LOSSES ARE ESTIMATED, AND INVENTORY RECORDS ARE VERIFIED. HOWEVER, MEASUREMENT AND ANALYSIS OF NUCLEAR MATERIALS ARE OFTEN HAMPERED BY THE SUBSTANCES' RADIOACTIVITY. SUCH DIFFICULTIES, PLUS THE TRANSFORMATIONS INHERENT IN FUEL IRRADIATION ALL LIMIT THE INFORMATION AVAILABLE TO AUDITORS AND INSPECTORS, AND THUS THEY AFFECT THE MEASUREMENT OF MATERIAL UNACCOUNTED FOR. PHYSICAL PROTECTION SUCH AS BARRIERS, ALARMS, AND GUARDS ARE USED MOST OFTEN IN INDUSTRIAL SECURITY. HOWEVER, DETAILED AUDITING PROCEDURES BY OUTSIDE INSPECTORS ARE DIFFICULT TO OBTAIN BECAUSE OF NATIONAL SECURITY RESTRICTIONS AND BECAUSE OF THE COMPLEXITY OF FUEL FABRICATION AND ENRICHMENT PROCESSES. ALTHOUGH PRIVATE INDUSTRY DESIRES TO COOPERATE WITH SAFEGUARD EFFORTS, MOST COMPANIES FEAR THE LOSS OF TRADE SECRETS REGARDING THEIR INDIVIDUAL INDUSTRIAL TECHNIQUES. EFFECTIVE SAFEGUARDS MUST ACCOMODATE THE INTERESTS OF ALL CONCERNED PARTIES. FOOTNOTES ARE PROVIDED. (TWK)