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Coordination and adoption of item-level RFID with vendor managed inventory

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  • Szmerekovsky, Joseph G.
  • Zhang, Jiang

Abstract

We study the affect on manufacturers and retailers of attaching radio frequency identification (RFID) tags at the item level in a vendor managed inventory (VMI) system. Our model has one manufacturer and one retailer. We first study the demand processes between an RFID system which uses continuous review and a non-RFID system which uses periodic review when shelf-space is limited. We then determine the optimal inventory policies in a centralized system and establish conditions under which the RFID system is preferable to the system without RFID. Finally, we study the decentralized system and show how the sharing of the tag price can be used to coordinate the supply chain and how it can be exploited in manufacturer and retailer dominated systems.

Suggested Citation

  • Szmerekovsky, Joseph G. & Zhang, Jiang, 2008. "Coordination and adoption of item-level RFID with vendor managed inventory," International Journal of Production Economics, Elsevier, vol. 114(1), pages 388-398, July.
  • Handle: RePEc:eee:proeco:v:114:y:2008:i:1:p:388-398
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    1. A. Gürhan Kök & Kevin H. Shang, 2007. "Inspection and Replenishment Policies for Systems with Inventory Record Inaccuracy," Manufacturing & Service Operations Management, INFORMS, vol. 9(2), pages 185-205, February.
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    Cited by:

    1. Yongchang Wei & Fangyu Chen & Feng Xiong, 2018. "Dynamic Complexities in a Supply Chain System with Lateral Transshipments," Complexity, Hindawi, vol. 2018, pages 1-15, June.
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    3. Pei, Jinxiang & Klabjan, Diego, 2010. "Inventory control in serial systems under radio frequency identification," International Journal of Production Economics, Elsevier, vol. 123(1), pages 118-136, January.
    4. Hariga, Moncer & Gumus, Mehmet & Daghfous, Abdelkader, 2014. "Storage constrained vendor managed inventory models with unequal shipment frequencies," Omega, Elsevier, vol. 48(C), pages 94-106.
    5. Chang, Seokcheol & Klabjan, Diego & Vossen, Thomas, 2010. "Optimal radio frequency identification deployment in a supply chain network," International Journal of Production Economics, Elsevier, vol. 125(1), pages 71-83, May.
    6. Sari, Kazim, 2010. "Exploring the impacts of radio frequency identification (RFID) technology on supply chain performance," European Journal of Operational Research, Elsevier, vol. 207(1), pages 174-183, November.
    7. Zhu, Shichao & Li, Jian & Wang, Shouyang & Xia, Yusen & Wang, Yajing, 2023. "The role of blockchain technology in the dual-channel supply chain dominated by a brand owner," International Journal of Production Economics, Elsevier, vol. 258(C).
    8. Varadarajan, Rajan & Srinivasan, Raji & Vadakkepatt, Gautham Gopal & Yadav, Manjit S. & Pavlou, Paul A. & Krishnamurthy, Sandeep & Krause, Tom, 2010. "Interactive Technologies and Retailing Strategy: A Review, Conceptual Framework and Future Research Directions," Journal of Interactive Marketing, Elsevier, vol. 24(2), pages 96-110.
    9. Ferrer, Geraldo & Dew, Nicholas & Apte, Uday, 2010. "When is RFID right for your service?," International Journal of Production Economics, Elsevier, vol. 124(2), pages 414-425, April.
    10. Kang, Jae-Hun & Kim, Yeong-Dae, 2012. "Inventory control in a two-level supply chain with risk pooling effect," International Journal of Production Economics, Elsevier, vol. 135(1), pages 116-124.
    11. Oleg Dejnega, 2011. "Vendor Managed Inventory and Relish of Both Partners," Annals of the University of Petrosani, Economics, University of Petrosani, Romania, vol. 11(4), pages 61-72.
    12. Nativi, Juan Jose & Lee, Seokcheon, 2012. "Impact of RFID information-sharing strategies on a decentralized supply chain with reverse logistics operations," International Journal of Production Economics, Elsevier, vol. 136(2), pages 366-377.
    13. Thiesse, Frédéric & Buckel, Thomas, 2015. "A comparison of RFID-based shelf replenishment policies in retail stores under suboptimal read rates," International Journal of Production Economics, Elsevier, vol. 159(C), pages 126-136.
    14. Fan, Ti-Jun & Chang, Xiang-Yun & Gu, Chun-Hua & Yi, Jian-Jun & Deng, Sheng, 2014. "Benefits of RFID technology for reducing inventory shrinkage," International Journal of Production Economics, Elsevier, vol. 147(PC), pages 659-665.
    15. Yang, Huixiao & Chen, Wenbo, 2020. "Game modes and investment cost locations in radio-frequency identification (RFID) adoption," European Journal of Operational Research, Elsevier, vol. 286(3), pages 883-896.
    16. Sarac, Aysegul & Absi, Nabil & Dauzère-Pérès, Stéphane, 2010. "A literature review on the impact of RFID technologies on supply chain management," International Journal of Production Economics, Elsevier, vol. 128(1), pages 77-95, November.
    17. Ferrer, Geraldo & Heath, Susan K. & Dew, Nicholas, 2011. "An RFID application in large job shop remanufacturing operations," International Journal of Production Economics, Elsevier, vol. 133(2), pages 612-621, October.
    18. Lei, Quansheng & Chen, Jian & Wei, Xingyu & Lu, Shan, 2015. "Supply chain coordination under asymmetric production cost information and inventory inaccuracy," International Journal of Production Economics, Elsevier, vol. 170(PA), pages 204-218.

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