The Value of Rfid Technology Enabled Information to Manage Perishables

37 Pages Posted: 13 Apr 2009

See all articles by Michael E. Ketzenberg

Michael E. Ketzenberg

Colorado State University, Fort Collins - Department of Management

Jacqueline M. Bloemhof-Ruwaard

Erasmus University Rotterdam (EUR) - Department of Technology and Operations Management; Erasmus Research Institute of Management (ERIM); Erasmus University Rotterdam (EUR) - Rotterdam School of Management (RSM)

Date Written: April 7, 2009

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.

Keywords: perishable inventory, value of information, simulation, RFID

JEL Classification: M11, R4, M, L81, O31, L23

Suggested Citation

Ketzenberg, Michael E. and Bloemhof-Ruwaard, Jacqueline M., The Value of Rfid Technology Enabled Information to Manage Perishables (April 7, 2009). ERIM Report Series Reference No. ERS-2009-020-LIS. Available at SSRN: https://ssrn.com/abstract=1376152

Michael E. Ketzenberg (Contact Author)

Colorado State University, Fort Collins - Department of Management ( email )

College of Business
Fort Collins, CO 80523-1275
United States
970-491-7154 (Phone)
970-491-3522 (Fax)

Jacqueline M. Bloemhof-Ruwaard

Erasmus University Rotterdam (EUR) - Department of Technology and Operations Management ( email )

RSM Erasmus University
PO Box 1738
3000 DR Rotterdam
Netherlands

Erasmus Research Institute of Management (ERIM)

P.O. Box 1738
3000 DR Rotterdam
Netherlands

Erasmus University Rotterdam (EUR) - Rotterdam School of Management (RSM) ( email )

P.O. Box 1738
Room T08-21
3000 DR Rotterdam, 3000 DR
Netherlands

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