Inventory Auditing and Replenishment Using Point-of-Sales Data

31 Pages Posted: 28 Oct 2014 Last revised: 8 May 2020

Date Written: June 23, 2019

Abstract

Spoilage, expiration, damage due to employee/customer handling, employee theft, and customer shoplifting usually are not reflected in inventory records. As a result, records often report phantom inventory, that is, units of good not available for sale. We derive an optimal polynomial‐time algorithm for the auditing and replenishment problem with phantom inventory, under the assumption that inventory is known immediately after replenishment. Moreover, we numerically show that a service‐level threshold policy performs comparably to the optimal.

Keywords: inventory record inaccuracy, inventory management, retail

JEL Classification: C11, D81

Suggested Citation

Bassamboo, Achal and Moreno, Antonio and Stamatopoulos, Ioannis, Inventory Auditing and Replenishment Using Point-of-Sales Data (June 23, 2019). Available at SSRN: https://ssrn.com/abstract=2515147 or http://dx.doi.org/10.2139/ssrn.2515147

Achal Bassamboo

Northwestern University - Department of Managerial Economics and Decision Sciences (MEDS) ( email )

2001 Sheridan Road
Evanston, IL 60208
United States

Antonio Moreno

Harvard University - Technology & Operations Management Unit ( email )

Boston, MA 02163
United States

HOME PAGE: http://www.hbs.edu/faculty/Pages/profile.aspx?facId=1029325

Ioannis Stamatopoulos (Contact Author)

The University of Texas at Austin - McCombs School of Business ( email )

2110 Speedway B6000
Austin, TX 78705
United States

HOME PAGE: http://https://sites.utexas.edu/yannis-stamos/

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