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

Daniel Thiel (), Vincent Hovelaque and Thi Le Hoa Vo ()
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Thi Le Hoa Vo: CREM - Centre de recherche en économie et management - UNICAEN - Université de Caen Normandie - NU - Normandie Université - UR - Université de Rennes - CNRS - Centre National de la Recherche Scientifique

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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
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Citations: View citations in EconPapers (12)

Published in International Journal of Production Economics, 2010, 123, pp.301-311

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Journal Article: Impact of inventory inaccuracy on service-level quality in (Q,R) continuous-review lost-sales inventory models (2010)
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Persistent link: https://EconPapers.repec.org/RePEc:hal:journl:halshs-00478488

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