Inventory Record Inaccuracy: An Empirical Analysis

Nicole DeHoratius () and Ananth Raman ()
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Nicole DeHoratius: Graduate School of Business, The University of Chicago, Chicago, Illinois 60637
Ananth Raman: Harvard Business School, Boston, Massachusetts 02163

Management Science, 2008, vol. 54, issue 4, 627-641

Abstract: Traditional inventory models, with a few exceptions, do not account for the existence of inventory record inaccuracy (IRI), and those that do treat IRI as random. This study explores IRI observed both within and across product categories and retail stores. Examining nearly 370,000 inventory records from 37 stores of one retailer, we find 65% to be inaccurate. We characterize the distribution of IRI and show, using hierarchical linear modeling (HLM), that 26.4% of the total variance in IRI lies between product categories and that 2.7% lies between stores. We identify several factors that mitigate record inaccuracy, such as inventory auditing practices, and several factors that exacerbate record inaccuracy, such as the complexity of the store environment and the distribution structure. Collectively, these covariates explain 67.6% and 69.0% of the variance in IRI across stores and product categories, respectively. Our findings underscore the need to design processes to reduce the occurrence of IRI and highlight factors that can be incorporated into inventory planning tools developed to account for its presence.

Keywords: execution; information technology; inventory control; record inaccuracy; retail; supply chains (search for similar items in EconPapers)
Date: 2008
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Citations: View citations in EconPapers (89)

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Persistent link: https://EconPapers.repec.org/RePEc:inm:ormnsc:v:54:y:2008:i:4:p:627-641

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