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Optimal Ordering Policy of a Risk-Averse Retailer Subject to Inventory Inaccuracy
Joint Authors
Lee, Chulung
Zhu, Lijing
Hong, Ki-sung
Source
Mathematical Problems in Engineering
Issue
Vol. 2013, Issue 2013 (31 Dec. 2013), pp.1-8, 8 p.
Publisher
Hindawi Publishing Corporation
Publication Date
2013-11-24
Country of Publication
Egypt
No. of Pages
8
Main Subjects
Abstract EN
Inventory inaccuracy refers to the discrepancy between the actual inventory and the recorded inventory information.
Inventory inaccuracy is prevalent in retail stores.
It may result in a higher inventory level or poor customer service.
Earlier studies of inventory inaccuracy have traditionally assumed risk-neutral retailers whose objective is to maximize expected profits.
We investigate a risk-averse retailer within a newsvendor framework.
The risk aversion attitude is measured by conditional-value-at-risk (CVaR).
We consider inventory inaccuracy stemming both from permanent shrinkage and temporary shrinkage.
Two scenarios of reducing inventory shrinkage are presented.
In the first scenario, the retailer conducts physical inventory audits to identify the discrepancy.
In the second scenario, the retailer deploys an automatic tracking technology, radiofrequency identification (RFID), to reduce inventory shrinkage.
With the CVaR criterion, we propose optimal policies for the two scenarios.
We show monotonicity between the retailer’s ordering policy and his risk aversion degree.
A numerical analysis provides managerial insights for risk-averse retailers considering investing in RFID technology.
American Psychological Association (APA)
Zhu, Lijing& Hong, Ki-sung& Lee, Chulung. 2013. Optimal Ordering Policy of a Risk-Averse Retailer Subject to Inventory Inaccuracy. Mathematical Problems in Engineering،Vol. 2013, no. 2013, pp.1-8.
https://search.emarefa.net/detail/BIM-1011271
Modern Language Association (MLA)
Zhu, Lijing…[et al.]. Optimal Ordering Policy of a Risk-Averse Retailer Subject to Inventory Inaccuracy. Mathematical Problems in Engineering No. 2013 (2013), pp.1-8.
https://search.emarefa.net/detail/BIM-1011271
American Medical Association (AMA)
Zhu, Lijing& Hong, Ki-sung& Lee, Chulung. Optimal Ordering Policy of a Risk-Averse Retailer Subject to Inventory Inaccuracy. Mathematical Problems in Engineering. 2013. Vol. 2013, no. 2013, pp.1-8.
https://search.emarefa.net/detail/BIM-1011271
Data Type
Journal Articles
Language
English
Notes
Includes bibliographical references
Record ID
BIM-1011271