Abstract

Shrinkage can lead to inventory record inaccuracy which in turn may negatively affect the performance of supply chain control policies. In this paper the impact of shrinkage on the efficiency of transshipment operations is demonstrated using stochastic simulation. In particular, the value of full inventory visibility which could be achieved using RFID is approximated. This value is shown to be relatively low given the assumed properties of the transshipment policy. Our preliminary results suggest waiting for further tangible benefits of RFID before building its business case in transshipment environments.

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