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Impact of inaccurate data on supply chain inventory performance
- Publication Year :
- 2006
-
Abstract
- This research explores data inaccuracy and its impact on supply chain inventory performance. Theft and data entry error cause differences between the physical inventory levels and inventory levels recorded in the computer system. Physical inventory counts are one method commonly used to align physical and recorded inventory levels. Expected benefits of new technology, such as radio frequency identification (RFID) include improvements in the accuracy of supply chain data, including possibilities of real-time alignment of the data. This research looks at the factors of theft, order error, lead time, synchronization frequency, demand variability, stock-out policy, two separate ordering policies and their impact on inventory performance in a three-level supply chain setting for a single item. The order policies considered are the reorder point (ROP) policy with a fixed order quantity and the order-up-to (OUT) policy with a variable order quantity. Simulation modeling is used to analyze factor impacts on the service level degradation, inventory level degradation, and inventory inaccuracy. Factors and performance measures are analyzed at the system level and the individual echelon level. There were several findings. Inaccuracy at one echelon in the supply chain has a negative impact on inventory performance at other echelons. Inventory error increases order size and variability under the OUT policy with variable order quantities compounding the bullwhip effect. The ROP policy with fixed order quantities responds by increasing order placement frequency and experiences less service level degradation than the OUT policy. Dominating factors were order policy, stock-out policy, theft, and inventory synchronization frequency. In general, theft reduction is more effective for improving service level than increasing the frequency of synchronization. Increasing synchronization frequency eliminates warehouse denials (failures to order) and under-ordering. These conditions are caused by inaccuracy where the recorded inventory level dictates a ‘no order’ decision and the physical inventory level dictates an ‘order’ decision. Increasing the synchronization frequency only partially removes the impact of theft, including order variability under the OUT policy. Reduced inventory levels caused by shorted deliveries continue to cause service level degradation even when inventory is synchronized prior to every order placement.
Details
- Language :
- English
- Database :
- OpenDissertations
- Publication Type :
- Dissertation/ Thesis
- Accession number :
- ddu.oai.etd.ohiolink.edu.osu1164727086