Economic Evaluation of Systems that Expedite Inventory Information

Abstract:  Information delays exist when the most recent inventory information available to the Inventory Manager (IM) is dated.  Such situations arise when it takes a while to process the demand date, count the inventory, and pass the results to the IM.  We show that the optimal total inventory-related cost decreases when the length of the information delay decreases.  The amount of the decrease is an important datum for an IM interested in considering whether or not to invest the reducing the delay.  The investment is required to finance design and acquisition of an information (collection and dissemination) system that can reduce the information delay.  Such systems include phone calls, business meetings, and the use of information collection mechanisms such as radiofrequency identification tags.