Economic Evaluation of Systems that Expedite Inventory Information
Production and Operations Management Society, Vol. 16, No. 3, pp. 360-368, May-June 2007
9 Pages Posted: 12 Feb 2008
Abstract
Information delays exist when the most recent inventory information available to the Inventory Manager (IM) is dated. Such situations arise when it takes a while to process the demand data, count the inventory, and pass the results to the IM. We show that the optimal total inventory-related cost decreases when the length of the information delay decreases. The amount of the decrease is an important datum for an IM interested in considering whether or not to invest in reducing the delay. The investment is required to finance design and acquisition of an information (collection and dissemination) system that can reduce the information delay. Such systems include phone calls, business meetings, and the use of information collection mechanisms such as radio frequency identification tags.
Keywords: economic evaluation, information delays,delay evaluation,base-stock policy, partially observed inventory, incomplete information, sufficient statistics, RFID, radio frequency identification tags
JEL Classification: C61,M11,D81, D83
Suggested Citation: Suggested Citation
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