IDEAS home Printed from https://ideas.repec.org/a/eee/proeco/v123y2010i2p301-311.html
   My bibliography  Save this article

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

Author

Listed:
  • Thiel, Daniel
  • Hovelaque, Vincent
  • Thi Le Hoa, Vo

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.

Suggested Citation

  • Thiel, Daniel & Hovelaque, Vincent & Thi Le Hoa, Vo, 2010. "Impact of inventory inaccuracy on service-level quality in (Q,R) continuous-review lost-sales inventory models," International Journal of Production Economics, Elsevier, vol. 123(2), pages 301-311, February.
  • Handle: RePEc:eee:proeco:v:123:y:2010:i:2:p:301-311
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S0925-5273(09)00352-1
    Download Restriction: Full text for ScienceDirect subscribers only

    As the access to this document is restricted, you may want to look for a different version below or search for a different version of it.

    Other versions of this item:

    References listed on IDEAS

    as
    1. Nicole DeHoratius & Ananth Raman, 2008. "Inventory Record Inaccuracy: An Empirical Analysis," Management Science, INFORMS, vol. 54(4), pages 627-641, April.
    2. Hill, R.M., 2007. "Continuous-review, lost-sales inventory models with Poisson demand, a fixed lead time and no fixed order cost," European Journal of Operational Research, Elsevier, vol. 176(2), pages 956-963, January.
    3. Fleisch, Elgar & Tellkamp, Christian, 2005. "Inventory inaccuracy and supply chain performance: a simulation study of a retail supply chain," International Journal of Production Economics, Elsevier, vol. 95(3), pages 373-385, March.
    4. Persona, Alessandro & Battini, Daria & Manzini, Riccardo & Pareschi, Arrigo, 2007. "Optimal safety stock levels of subassemblies and manufacturing components," International Journal of Production Economics, Elsevier, vol. 110(1-2), pages 147-159, October.
    5. Donald L. Iglehart & Richard C. Morey, 1972. "Inventory Systems with Imperfect Asset Information," Management Science, INFORMS, vol. 18(8), pages 388-394, April.
    6. Rekik, Yacine & Sahin, Evren & Dallery, Yves, 2008. "Analysis of the impact of the RFID technology on reducing product misplacement errors at retail stores," International Journal of Production Economics, Elsevier, vol. 112(1), pages 264-278, March.
    7. Gumrukcu, Seda & Rossetti, Manuel D. & Buyurgan, Nebil, 2008. "Quantifying the costs of cycle counting in a two-echelon supply chain with multiple items," International Journal of Production Economics, Elsevier, vol. 116(2), pages 263-274, December.
    8. Sahin, Evren & Buzacott, John & Dallery, Yves, 2008. "Analysis of a newsvendor which has errors in inventory data records," European Journal of Operational Research, Elsevier, vol. 188(2), pages 370-389, July.
    9. Sahin, Evren & Dallery, Yves, 2009. "Assessing the impact of inventory inaccuracies within a Newsvendor framework," European Journal of Operational Research, Elsevier, vol. 197(3), pages 1108-1118, September.
    10. Uçkun, Canan & Karaesmen, Fikri & Savas, Selçuk, 2008. "Investment in improved inventory accuracy in a decentralized supply chain," International Journal of Production Economics, Elsevier, vol. 113(2), pages 546-566, June.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Fan, Tijun & Tao, Feng & Deng, Sheng & Li, Shuxia, 2015. "Impact of RFID technology on supply chain decisions with inventory inaccuracies," International Journal of Production Economics, Elsevier, vol. 159(C), pages 117-125.
    2. Agrawal, Paras M. & Sharda, Ramesh, 2012. "Impact of frequency of alignment of physical and information system inventories on out of stocks: A simulation study," International Journal of Production Economics, Elsevier, vol. 136(1), pages 45-55.
    3. Cannella, Salvatore & Framinan, Jose M. & Bruccoleri, Manfredi & Barbosa-Póvoa, Ana Paula & Relvas, Susana, 2015. "The effect of Inventory Record Inaccuracy in Information Exchange Supply Chains," European Journal of Operational Research, Elsevier, vol. 243(1), pages 120-129.
    4. Zhang, Cuihua & Xing, Peng, 2015. "A research on service quality decision-making of Chinese communications industry based on quantum game," Physica A: Statistical Mechanics and its Applications, Elsevier, vol. 432(C), pages 9-15.
    5. Wang, Fuqiang & Fang, Xiaoping & Chen, Xiaohong & Li, Xihua, 2016. "Impact of inventory inaccuracies on products with inventory-dependent demand," International Journal of Production Economics, Elsevier, vol. 177(C), pages 118-130.
    6. Mendes, Paulo & Leal, José Eugênio & Thomé, Antônio Márcio Tavares, 2016. "A maturity model for demand-driven supply chains in the consumer product goods industry," International Journal of Production Economics, Elsevier, vol. 179(C), pages 153-165.
    7. Kumar, Anupam & Evers, Philip T., 2015. "Setting safety stock based on imprecise records," International Journal of Production Economics, Elsevier, vol. 169(C), pages 68-75.
    8. Feng Tao & Tijun Fan & Kin Keung Lai & Lin Li, 2017. "Impact of RFID technology on inventory control policy," Journal of the Operational Research Society, Palgrave Macmillan;The OR Society, vol. 68(2), pages 207-220, February.
    9. Hariga, Moncer A., 2010. "A single-item continuous review inventory problem with space restriction," International Journal of Production Economics, Elsevier, vol. 128(1), pages 153-158, November.
    10. Cannella, Salvatore & Dominguez, Roberto & Framinan, Jose M., 2017. "Inventory record inaccuracy – The impact of structural complexity and lead time variability," Omega, Elsevier, vol. 68(C), pages 123-138.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eee:proeco:v:123:y:2010:i:2:p:301-311. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Dana Niculescu). General contact details of provider: http://www.elsevier.com/locate/ijpe .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.