The effect of Inventory Record Inaccuracy in Information Exchange Supply Chains

Thegoal of this paper is toquantify the impact of InventoryRecord Inaccuracyon thedynamicsof collaborative supply chains, both in terms of operational performance (i.e. order and inventory stability), and customer service level. To do so, we model an Information Exchange Supply Chain under shrinkage errors in the inventory item recording activity of their nodes, present the mathematical formulation of such supply chain model, and conduct a numerical simulation assuming different levels of errors. Results clearly show that Inventory Record Inaccuracy strongly compromises supply chain stability, particularlywhenmoving upwards in the supply chain. Important managerial insights can be extracted from this analysis, such as the role of ‘benefit-sharing’ strategies in order to guarantee the advantage of investments in connectivity technologies. © 2014 Published by Elsevier B.V. C T B C t o 2 p e d u d F q w & S T r c d