Impact of inventory inaccuracy on service-level quality in (Q,R) continuous-review lost-sales inventory models

Daniel Thiel, Vincent Hovelaque and Vo Thi Le Hoa

International Journal of Production Economics, 2010, vol. 123, issue 2, 301-311

Abstract: This article focus on the behavior of a (Q,R) continuous-review lost-sales inventory model exposed to an inventory record inaccuracy (IRI). An unusual phenomenon has been observed which runs counter to certain empirical practices in the SMEs based on the principle that safety stock is only necessary for certain intervals in the data inaccuracy rate. Both analytical results and simulation modeling are proposed to investigate the relationship between the quality of service, safety stock and inventory inaccuracy under demand variations. It is shown that the service-level quality is a non-monotone function of the inaccuracy rate, i.e., the service-level quality increases up to an IRI level and subsequently decreases. Other inaccuracy distribution functions have produced the same phenomena with constant demand as well as with demand fluctuations. Finally, another noteworthy result also shows the same phenomenon between the function involving a level of safety stock defined by simulation and the function between the service-level quality and IRI. These different observed results are discussed in terms of both their contribution to the (Q,R) inventory management policies in SMEs and of the limitations to this study.

Keywords: Continuous-review; inventory; system; Inventory; inaccuracy; Continuous; model; Discrete-time; simulation; Simulation (search for similar items in EconPapers)
Date: 2010
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (12)

Downloads: (external link)
http://www.sciencedirect.com/science/article/pii/S0925-5273(09)00352-1
Full text for ScienceDirect subscribers only

Related works:
Working Paper: Impact of inventory inaccuracy on service-level quality in (Q,R) continuous-review lost-sales inventory models (2010)
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:123:y:2010:i:2:p:301-311

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 ().