A theoretical study on optimal inventory-taking frequency for retailing

Abstract In a supermarket or a convenience store, an inventory-taking is periodically performed to detect a gap between the actual stocks and their inventory records. Its frequency is, however, empirically determined under the real circumstances. This study proposes a mathematical model, which provides an optimal frequency for a periodical inventory-taking. Under the proposed model, an inventory-taking is conducted at times iT/N(i=1, 2, …, N) for a prespecified time span T and a design variable N. The expected cost per unit time under the periodical inventory-taking strategy is formulated, considering the cost for inventory-taking activities and the investigation cost for the deviation causes. The conditions under which an optimal frequency for the inventory-taking activities exists are clarified. Numerical examples are also presented.