Inventory Auditing and Replenishment Using Point-of-Sales Data
30 Pages Posted: 28 Oct 2014 Last revised: 21 Nov 2019
Date Written: June 23, 2019
Spoilage, expiration, damage due to employee and/or customer handling, employee theft, and customer shoplifting usually are not reflected in inventory records. As a result, records often include phantom inventory, i.e., units of good that are not actually available for sale. We derive an optimal polynomial-time algorithm for the auditing and replenishment problem in the presence of phantom inventory under the assumption that inventory is known immediately after replenishment. Moreover, we numerically show that a projected service-level threshold policy performs comparably to the optimal.
Keywords: nventory record inaccuracy, inventory management, retail
JEL Classification: C11, D81
Suggested Citation: Suggested Citation