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

The Future of Retail Operations

Retailing consists of all the activities associated with the selling of goods to the final consumer. In this article, we review the research on retail operations published in Manufacturing & Service Operations Research (M&SOM) since 1999. We then discuss the current retail landscape and the new research directions it offers, in which M&SOM can play a prominent role

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

Using RFID to Improve Inventory Accuracy

Accurate inventory is a key to effective supply chain management and store execution, affecting forecasting, ordering, and replenishment. Prior empirical research, however, shows that retailer perpetual inventory (PI) is inherently inaccurate. Radio frequency identification (RFID)-technology enables visibility into the movement of inventories within the supply chain. This research investigates the effectiveness of this visibility in improving retail store inventory record accuracy. We perform daily physical counts of 337 stock keeping units in one category in 13 stores of a major global retailer over 23 weeks. Eight stores auto-adjusted PI based on RFID-enabled visibility; five stores were RFID-enabled but did not auto-adjust PI. The preliminary results of the study show that RFID-enabled visibility results in a significant decrease in PI inaccuracy. We conclude that this visibility can help retailers improve store execution, specifically by reducing surplus inventories and labor costs

A Theoretical Overview of the Stockout Problem in Retail: from Causes to Consequences

ABSTRACT: Due to the relevance of stockouts in the retail sector together with their significantly negative effect both on retail and the whole supply chain, this paper offers a theoretical review of the stockout definition, rates, its main causes and consequences

On-Shelf Customer Availability Research: The Effects of the Day-of-the-Week, Product, and Category Characteristics on Stockouts

This paper seeks to examine the causes of stockouts and on-shelf customer availability by examining various product and category characteristics, as well as the day-of-the-week to study their effects on stockouts. Over 8 weeks, data was collected by taking tri-weekly photographs of three product categories at a retail store, and then the data was extracted to a spreadsheet before empirical analysis was done. The results of the study indicated that the probability of a stockout increased when planned facings decreased, the unit price increased, proper on-shelf placement decreased, and when other SKU’s of the same category also stocked out