Improving the Performance of Inventory Systems Subject to Errors by Deploying the RFID Technology

One of the implicit assumptions considered in the majority of investigations performed in the area of inventory management is that the physical flow that passes through an inventory system as well as the associated information flow are free from defects. In other words, for a given type of product, the level of the available inventory shown by the information system corresponds exactly to the physical quantity really available. However, various factors can create a difference between the expected and the effective physical and information flows. The performance of such inventory systems whose flows are disturbed by errors can be improved by using advanced product identification and data capture technologies such as the RFID (Radio Frequency Identification) technology. This paper deals with the consideration of errors in inventory management related decisions and analyses whether RFID is cost effective in tackling this issue.