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

Bassamboo, Achal and Moreno, Antonio and Stamatopoulos, Ioannis, Inventory Auditing and Replenishment Using Point-of-Sales Data (June 23, 2019). Available at SSRN: or

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


Ioannis Stamatopoulos (Contact Author)

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

2110 Speedway B6000
Austin, TX 78705
United States

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