Impact of inventory inaccuracy on service-level quality: A simulation analysis

This article discusses the impact of inventory inaccuracy on service-level quality in (Q,R) continuous review, lost-sales inventory models. A simulation model is built to study the behaviour of this kind of model exposed to an inaccuracy in inventory records as well as demand variability. We have observed an unusual result which goes against certain empirical practices in the SMEs that consist in hiking the inventory level proportionally to the data inaccuracy rate. A nonmonotone function shows that at the outset, the service-level quality is lowered as the inaccuracy rate increases but when the inaccuracy rate becomes much higher this quality is conversely enhanced. This relation can equally be observed given that stocktaking commences as soon as the threshold of decline in the service-level rate has been reached and when demand consequently dwindles. Finally, another noteworthy result also shows the same phenomenon between the function involving a level of safety stock defined by the simulation and the function between the service-level quality and the inventory inaccuracy. These different observed results are discussed in terms of both contribution to the (Q,R) inventory management policies in SMEs and of the limitations to this study.Continuous review inventory system, inventory inaccuracy, continuous model, discrete-time simulation

Problems of code of products that affect the inventory management: cuban companies case study

Numerous code systems and classification of products and services exist globally, being tendency the standardization of them in the supply chains to achieve higher integration. The correct use of these systems is considered essential in the effectiveness in the inventory management, given its direct relationship with the registration of the primary information and tracing of the products. However, the scientific literature and the academic programs concentrate mostly on the Auto-ID technologies more than in the code structure and the consequences of an incorrect use of the code. The present article reflects the main deficiencies possible to detect in the systems of code of products, using a sample of companies in Cuba. The consequences of these deficiencies are discussed and it is also included a proposal of organization of the code for the Cuban companies

Analysis of simple inventory control systems with execution errors: Economic impact under correction opportunities

Cataloged from PDF version of article.Motivated by recent empirical evidence, we study the economic impact of inventory record inaccuracies that arise due to execution errors. We model a set of probable events regarding the erroneous registering of sales at each demand arrival. We define correction opportunities that can be used to (at least partially) correct inventory records. We analyze a simple inventory control model with execution errors and correction opportunities, and demonstrate that decisions that consider the existence of recording errors and the mechanisms with which they are corrected can be quite complicated and exhibit complex tradeoffs. To evaluate the economic impact of inventory record inaccuracies, we use a simulation model of a (Q,r) inventory control system and evaluate suboptimalities in cost and customer service that arise as a result of untimely triggering of orders due to inventory record inaccuracies. We show that the economic impact of inventory record inaccuracies can be significant, particularly in systems with small order sizes and low reorder levels. (C) 2010 Elsevier BM. All rights reserved

Misplaced Inventory and Lead-Time in the Supply Chain: Analysis of Decision-Making on RFID Investment with Service Level

Radio-frequency identification (RFID), as the key technology of Internet of Things (IoT), has been hailed as a major innovation to solve misplaced inventory and reduce lead-time. Many retailers have been pushing their suppliers to invest this technology. However, its associated costs seem to prohibit its widespread application. This paper analyzes the situation of service level in a retail supply chain, which has resulted from misplaced inventory and lead-time. By newsvendor model, we analyze the difference between with- and without-RFID technologies in service level of centralized and decentralized supply chains, respectively. Then with different service levels, we determine the tag cost thresholds at which RFID technology investment becomes profitable in centralized and decentralized supply chains, respectively. Furthermore, we apply a linear transfer payment coefficient strategy to coordinate with the decentralized supply chain. It is found that whether the adoption of RFID technology improves the service level depends on the cost of RFID tag in the centralized system, but it improves the service level in the decentralized system when only the supplier bears the cost of RFID tag. Moreover, the same cost thresholds of RFID tag with different service levels exist in both the centralized and the decentralized cases

Internet-of-things enabled supply chain planning and coordination with big data services: certain theoretic implications

Recent advances in information technology have led to profound changes in global manufacturing. This study focuses on the theoretical and practical challenges and opportunities arising from the Internet of Things (IoT) as it enables new ways of supply-chain operations partially based on big-data analytics and changes in the nature of industries. We intend to reveal the acting principle of the IoT and its implications for big-data analytics on the supply chain operational performance, particularly with regard to dynamics of operational coordination and optimization for supply chains by leveraging big data obtained from smart connected products (SCPs), and the governance mechanism of big-data sharing. Building on literature closely related to our focal topic, we analyze and deduce the substantial influence of disruptive technologies and emerging business models including the IoT, big data analytics and SCPs on many aspects of supply chains, such as consumers value judgment, products development, resources allocation, operations optimization, revenue management and network governance. Furthermore, we propose several research directions and corresponding research schemes in the new situations. This study aims to promote future researches in the field of big data-driven supply chain management with the IoT, help firms improve data-driven operational decisions, and provide government a reference to advance and regulate the development of the IoT and big data industry.Published versio

Analysis of a newsvendor which has errors in inventory data records

International audienc

Análise e melhoria da precisão do registo dos níveis de stock no setor da distribuição: estudo de caso

Atualmente no setor da logística, particularmente no setor da distribuição, as organizações enfrentam diversos desafios no que concerne à eficácia e eficiência dos seus processos operacionais para satisfazer o consumidor final cada vez mais exigente. A presente dissertação, desenvolvida em dois centros de distribuição do Grupo Sonae SR localizados na Azambuja, visa analisar as discrepâncias existentes entre o registo dos níveis de stock nos sistemas de informação e os níveis de stock reais presentes nas localizações de armazenagem, também designado por Inventory Record Inaccuracy (IRI). Assim, propõe-se identificar alguns padrões, com a finalidade de identificar algumas causas que contribuem para a ocorrência do IRI. Primeiramente, foi realizada uma revisão da literatura sobre os conceitos chave da dissertação assim como a descrição dos processos operacionais decorrentes nos dois centros de distribuição onde o estudo de caso foi realizado. Posteriormente, identificou-se algumas causas que potenciam a ocorrência do IRI, servindo de fundamento para a aplicação do teste estatístico de Kruskal-Wallis a partir do histórico de inventários realizados pela equipa de Stock Accuracy. Este teste estatístico teve como objetivo a identificação de diferenças de distribuição estatística sobre a variável IRI entre diferentes variáveis definidas. Como resultado, as variáveis “valor unitário do artigo”, “volume da caixa do artigo”, “quantidades ativas de stock na localização” “número de registos em histórico de sinbin” e “número de registos em histórico de excessos” não apresentaram evidência das suas distribuições permanecerem iguais nas diferentes classes de IRI, influenciando de alguma forma a ocorrência do IRI. Posteriormente, são sugeridas algumas propostas de melhoria futuras que visam melhorar a precisão dos registos dos níveis de stock nos centros de distribuição, assim como a implementação de uma dashboard operacional constituída por alguns Key Performance Indicators e Key Result Indicators

A simulation approach for modelling and investigation of inventory inaccuracy in warehouse operation

This thesis is focused on a simulation modelling approach to address the inventory inaccuracy problems in a warehouse operation. The main motivation which led to this research was a desire to investigate the inventory inaccuracy issues that have been highlighted by a logistics company. Previous and current research into inventory inaccuracy issues is largely related to the development of RFID technology as a possible solution to inventory problems. Since the inventory inaccuracy related to RFID technology is focused on the overall measurement of inventory management and retail business, there are differences between this existing research and the research presented in this thesis which is focused on issues of inventory inaccuracy in a warehouse operation. In this thesis, warehouse operation is studied as a detailed sequence of processes that are involved in the flow of items physically in parallel with related information being stored in the computer system. In these processes there are many places where errors can occur in counting or recording details of inventory, or in physically moving, storing or picking items incorrectly. These details of a warehouse operation are used to develop a conceptual model of inventory inaccuracy in warehouse operations. The study also found that typically a product needs to be considered differently at different stages of its progress through a warehouse (and therefore within different sections of the conceptual model). This is because initially batches of a product are likely to be delivered from a supplier, therefore if errors occur soon after the product is delivered to the warehouse, the error might involve the whole batch (for example the batch may be misplaced and put in an incorrect storage location), or the error might involve just part of the batch (for example poor transportation by forklift truck may damage the packaging carton and some of the items within the carton). When the product is stored ready for meeting customer orders, it needs to be considered as individual items (and errors can occur in counting of individual items or individual items may be misplaced or stolen). Finally, when a customer order is received, the product will be picked and grouped to meet the requirements of the order (for example, one order may require 10 of the product whilst another order may require 20 of the product). Errors might again occur to the whole group or to just part of the group. (Continued ...