INVENTORY RECORD INACURACY DUE TO THEFT IN PRODUCTIONINVENTORY SYSTEMS

摘要

Inventory record inaccuracy (IRI) is a major obstacle to realizing operational excellence and leanenterprise principles in the supply chain. This paper proposes an analytical model to study theoperational and economic impacts of inventory record inaccuracy stemming from theft type erroron a continuous-review lost sale (s, Q) inventory system. The model builds on a Markovianinventory system and finds optimal safety stock and reorder quantity of product by minimizingthe expected costs, which are composed of four components: inventory holding cost, productioncost, ordering cost and lost sales cost. This production-inventory model is analyzed across twoscenarios depending on which technology is deployed to optimize replenishment decisions: (1)Barcode technology; (2) RFID technology. Our numerical analysis illustrates the solutionprocedure and the effects of the model parameters on the inventory replenishment decisions andtotal costs.