Inventory inaccuracy in retail stores due to theft: An analysis of the benefits of RFID

Yacine Rekik, Evren Sahin and Yves Dallery

International Journal of Production Economics, 2009, vol. 118, issue 1, 189-198

Abstract: We consider a finite-horizon, single-stage, single-product periodic review store inventory in which inventory records are inaccurate. We assume that inventory inaccuracies are introduced by theft type errors that arise within the store. We propose a comparison between three approaches based on which the inventory system can be managed in presence of theft errors: in the first approach, we assume that the inventory manager ignores errors occurring in the store. In the second approach, we focus on the benefit that can be achieved through a better knowledge of errors, i.e. by taking into account this information in designing the inventory policy. In the third approach, we focus on the contribution of a perfect RFID technology that enables to improve the system. We analyze the problem of having theft in store by optimizing the holding cost under a service level constraint. The comparison between the three approaches permits us to analyze the impact of theft errors and the value of the RFID technology on the inventory system. We also propose an analytical critical tag cost which makes the deployment of the RFID technology cost effective.

Keywords: Periodic; review; inventory; Inventory; record; inaccuracy; Theft; RFID (search for similar items in EconPapers)
Date: 2009
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (23)

Downloads: (external link)
http://www.sciencedirect.com/science/article/pii/S0925-5273(08)00264-8
Full text for ScienceDirect subscribers only

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:eee:proeco:v:118:y:2009:i:1:p:189-198

Access Statistics for this article

International Journal of Production Economics is currently edited by Stefan Minner

More articles in International Journal of Production Economics from Elsevier
Bibliographic data for series maintained by Catherine Liu ().