Misplaced Inventory and RFID: Information
and Coordination
Almula Z.
Camdereli and Jayashankar
M. Swaminathan
Misplaced
inventory is a major operational inefficiency in many supply chains. We
analytically study the effects of inventory misplacement on operational
dynamics in vertically integrated and decentralized supply chains. Furthermore,
we research how inventory misplacement affects the standard buy-back and
revenue sharing contracting mechanisms. Radio Frequency Identification (RFID)
technology has been publicized as a promising solution for the misplaced
inventory problem. Adoption of this technology has a fixed cost and variable
cost of implementation, which can cause incentive issues in the supply chain.
We also characterize the incentives of the parties in the supply chain under
inventory misplacement to invest in RFID in centralized, uncoordinated and
coordinated supply chains.