I was looking for this shrinks tutorial long time ago and I am lucky today to find it in the internet.
The material is from recycle plastic box such as salad container or bread container. Look for plastic marked number 6 in the recycling triangle.
Other tools you need are:
markers (light colors and black)
scissors
hole punch
toaster or oven (preheated 250 degree F)
polyurethane (optional)
Click here for the tutorial by Michelle Dupuis.