Analysis

The 4,000th F-16 was built in 1991 and delivered to the
EAF.
The F-16 fleet status graph shows the "S-curve" pattern typical for any product introduction. For the F-16, early adoption was in the early 1980s, followed by mass deployment in the '80s and '90s and finally production slow-down in the past decade.
In the early years only a small number of aircraft were produced, only accounting for the prototypes and the pre-production models. The massive build-up between 1979 and 1982 accounted almost solely for the
EPAF countries. Production has slowed down over the past years with
Greece receiving their final batch (2009) and
Pakistan,
Turkey and
Morocco set to receive theirs over the next few years.
Currently total F-16 production (at the time of writing - February 2010) stands at 4,427 airframes. The 1,000th Fighting Falcon rolled off the production line in 1983 and subsequent milestones were reached in 1987 (2,000th), 1991 (3,000th), and 1999 (4,000th). It is highly unlikely that production will ever reach 5,000, as there are currently less than 100 aircraft in the order books and production has slowed to 2 airframes per month.
The main cause for active inventory reduction is attrition. The first F-16 aircraft became operational in 1979 (96 aircraft) and that same year two aircraft were written off (note that this attrition only shows up in 1980, since the aircraft were active for at least part of 1979). To date, 533 F-16s have been written off, accounting for a significant part of the F-16 fleet.
The second largest cause for active fleet reduction is aircraft being retired. There are two obvious causes for retirement: first of all, in the mid-nineties the first F-16s were reaching the end of their service life. Second, after the fall of the Berlin Wall, a number of countries wanted to cash in on the "peace dividend" and decided to reduce their active fleet. Both
Belgium and the US started to move their oldest F-16s into storage in 1994/1995 resulting in up to 400 airframes being withdrawn from use in those years.
Retired aircraft are either scrapped (if the airframe is spent), used as instructional airframes (for ground crew instruction), preserved in museums or as gateguards, or mothballed & stored. Note that sometimes aircraft are brought out of storage and sold second hand, as was the case in 2002-2003.