Information inaccuracy in inventory systems

It is critically important for inventory-carrying facilities to provide high availability of products at the minimal operating cost. To achieve this objective, many companies have automated their inventory operations and rely on the information system in critical decision makings. However, if the information is inaccurate, it may lead to high out-of-stocks and/or excess inventory. This thesis examines what the primary causes of the inaccuracy are, how and to what extent they degrade the inventory system performance, and what can be done to compensate for the inaccuracy. Analytical and simulation modelling demonstrate that the inventory system performance is highly sensitive to the inaccuracy caused by stock loss, which is the disappearance of items (such as due to theft) not detected by the information system. That is, even a small level of stock loss accumulated over time can lead to inventory inaccuracy that disrupts the replenishment process and creates severe out-of-stocks. In fact, revenue losses due to out-of-stocks can far outweigh the property losses due to the disappearing items.

Department dc:contributor.department

Massachusetts Institute of Technology. Dept. of Mechanical Engineering.

Grantor dc:publisher

Massachusetts Institute of Technology

Year dc:date.issued

2004

Author dc:creator

• Kang, Yun Kyu

Advisor dc:contributor.advisor

• Stanley B. Gershwin and Sanjay E. Sarma.

• Mechanical Engineering.

Statement dc:rights

• M.I.T. theses are protected by copyright. They may be viewed from this source for any purpose, but reproduction or distribution in any format is prohibited without written permission. See provided URL for inquiries about permission.

Licence dc:rights.uri

• http://dspace.mit.edu/handle/1721.1/7582

Language dc:language.iso

eng

Handle dc:identifier.uri

http://hdl.handle.net/1721.1/36193

OAI identifier oai:identifier

oai:dspace.mit.edu:1721.1/36193