Inventory control in serial systems under radio frequency identification

Jinxiang Pei*, Diego Klabjan

*Corresponding author for this work

Research output: Contribution to journalArticlepeer-review

12 Scopus citations

Abstract

The widely adopted slap-and-ship radio frequency identification strategy provides valuable information to retailers. On the other hand, suppliers struggle to find benefits even though they are submerged with new data. Radio frequency identification provides complete visibility of their shipments, including the time and location of every pallet, case or even item. We provide a novel model relying on such data that is capable of producing better inventory and shipping control policies. We first propose a comprehensive inventory model for serial systems that captures both the supply and distribution information. We show that the underlying cost-to-go can be decomposed into two lower dimensional functions. In a special case, the optimal replenishment and shipping policies are base stock with respect to the underlying positions. In addition, we also analytically study the value of radio frequency identification in terms of the expected total minimum cost over a finite time horizon by introducing partial radio frequency deployment scenarios. Results indicate that additional cost reductions are possible with broader deployments.

Original languageEnglish (US)
Pages (from-to)118-136
Number of pages19
JournalInternational Journal of Production Economics
Volume123
Issue number1
DOIs
StatePublished - Jan 1 2010

Keywords

  • Inventory control
  • Radio frequency identification

ASJC Scopus subject areas

  • Business, Management and Accounting(all)
  • Economics and Econometrics
  • Management Science and Operations Research
  • Industrial and Manufacturing Engineering

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