Abstract

http://ssrn.com/abstract=1971500
 
 

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Inventory Management with Purchase Order Errors and Rework


Nathan Craig


Ohio State University (OSU) - Fisher College of Business

Nicole DeHoratius


University of Chicago - Booth School of Business

Yan Jiang


Northwestern University - Department of Industrial Engineering and Management Sciences

Diego Klabjan


Northwestern University

August 12, 2014

Chicago Booth Research Paper No. 12-58

Abstract:     
Shipments received by retail distribution centers may contain errors that retailers can correct through rework. A ticket error, for example, occurs when the tickets attached to some items within a purchase order (PO) display incorrect information, such as selling price, and can be amended by affixing corrected tickets. Ticket errors and other PO fulfillment errors, discussed herein, are costly and different from traditional random yields. This paper describes the prevalence of PO errors at a large retail chain and studies the cost of PO errors to a standard inventory system. In so doing, this research provides guidance to retailers seeking to collaborate with vendors to reduce errors, set appropriate chargebacks to incentivize vendors, or modify their inventory policy to account for PO errors.

Number of Pages in PDF File: 35

Keywords: retail, inventory accuracy, vendor compliance

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Date posted: December 14, 2011 ; Last revised: August 15, 2014

Suggested Citation

Craig, Nathan and DeHoratius, Nicole and Jiang, Yan and Klabjan, Diego, Inventory Management with Purchase Order Errors and Rework (August 12, 2014). Chicago Booth Research Paper No. 12-58. Available at SSRN: http://ssrn.com/abstract=1971500 or http://dx.doi.org/10.2139/ssrn.1971500

Contact Information

Nathan Craig
Ohio State University (OSU) - Fisher College of Business ( email )
2100 Neil Avenue
Columbus, OH 43210-1144
United States
Nicole DeHoratius (Contact Author)
University of Chicago - Booth School of Business ( email )
5807 S. Woodlawn Avenue
Chicago, IL 60637
United States

Chicago Booth School of Business Logo

Yan Jiang
Northwestern University - Department of Industrial Engineering and Management Sciences ( email )
Evanston, IL 60208-3119
United States
Diego Klabjan
Northwestern University ( email )
2001 Sheridan Road
Evanston, IL 60208
United States
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