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The Value of RFID Technology Enabled Information to Manage Perishables

Author

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  • Ketzenberg, M.E.
  • Bloemhof-Ruwaard, J.M.

Abstract

We address the value of RFID technology enabled information to manage perishables in the context of a supplier that sells a random lifetime product subject to stochastic demand and lost sales. The product's lifetime is largely determined by the time and temperature history in the supply chain. We compare two information cases to a Base case in which the product's time and temperature history is unknown and therefore its shelf life is uncertain. In the first information case, the time and temperature history is known and therefore the remaining shelf life is also known at the time of receipt. The second information case builds on the first case such that the supplier now has visibility up the supply chain to know the remaining shelf life of inventory available for replenishment. We formulate these three different cases as Markov decision processes, introduce well performing heuristics of more practical relevance, and evaluate the value of information through an extensive simulation using representative, real world supply chain parameters.

Suggested Citation

  • Ketzenberg, M.E. & Bloemhof-Ruwaard, J.M., 2009. "The Value of RFID Technology Enabled Information to Manage Perishables," ERIM Report Series Research in Management ERS-2009-020-LIS, Erasmus Research Institute of Management (ERIM), ERIM is the joint research institute of the Rotterdam School of Management, Erasmus University and the Erasmus School of Economics (ESE) at Erasmus University Rotterdam.
    • Handle: RePEc:ems:eureri:15412
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    File URL: https://repub.eur.nl/pub/15412/ERS-2009-020-LIS.pdf
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    References listed on IDEAS

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    1. Bourland, Karla E. & Powell, Stephen G. & Pyke, David F., 1996. "Exploiting timely demand information to reduce inventories," European Journal of Operational Research, Elsevier, vol. 92(2), pages 239-253, July.
    2. Ketzenberg, Michael E. & Rosenzweig, Eve D. & Marucheck, Ann E. & Metters, Richard D., 2007. "A framework for the value of information in inventory replenishment," European Journal of Operational Research, Elsevier, vol. 182(3), pages 1230-1250, November.
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    Cited by:

    1. Vairetti, Carla & González-Ramírez, Rosa G. & Maldonado, Sebastián & Álvarez, Claudio & Voβ, Stefan, 2019. "Facilitating conditions for successful adoption of inter-organizational information systems in seaports," Transportation Research Part A: Policy and Practice, Elsevier, vol. 130(C), pages 333-350.

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    More about this item

    Keywords

    RFID; perishable inventory; simulation; value of information;
    All these keywords.

    JEL classification:

    • L23 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Organization of Production
    • L81 - Industrial Organization - - Industry Studies: Services - - - Retail and Wholesale Trade; e-Commerce
    • M - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics
    • M11 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Business Administration - - - Production Management
    • O31 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Innovation and Invention: Processes and Incentives
    • R4 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Transportation Economics

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