using RFID technology

发布时间：

S¯adhan¯aVol.30,Parts2&3,April/June2005,pp.445–462.©PrintedinIndia
PerishableinventorymanagementanddynamicpricingusingRFIDtechnology
ACHANDE+,SDHEKANE,NHEMACHANDRA∗andNRANGARAJ
IndustrialEngineeringandOperationsResearch,IndianInstituteofTechnologyBombay,Mumbai400076,India+
Presentaddress:ModelyticsIndiaPvt.Ltd.,IstFloor,SudhaComplex,No.24,WOCRoad,Basaveswaranagar,Bangalore560079,Indiae-mail:nh@iitb.ac.in
Abstract.Inprice-sensitivemarkets,pricepromotionscoupledwithanappro-priateitemreplenishmentstrategycanbeeffectiveincontrollingthetotalcostsofservicingthemarket.Insupplychainsthathandleperishableproducts,inventorymanagementisalreadyacomplexproblemandthemanagementofproductsinadynamic-pricingenvironmentisevenmorechallenging.Monitoringandcontroloftime-sensitiveproductscanbefacilitatedbytheapplicationofradiofrequencyidentification(RFIDtechnology,whichenablesnon-contact,real-timedatacol-lectionandefficientinterfacingwiththemanagementcontrolsysteminthesupplychain.Thispaperdescribesanintegratedframeworkforinventorymanagementandpricinginadiscretetime(periodicreviewandorderingframework,anddescribesanefficientalgorithm,includinganewapproximation,fortherelatedoptimiza-tionproblem.WethenproposeasuitablearchitecturefortheapplicationofRFIDtechnologyinthiscontext,torealizethepotentialbenefits.
Keywords.Perishableinventorymanagement;radiofrequencyidentification;valuechain;dynamicpricing;dynamicprogramming;productwithdrawal;pricepromotions.
1.Introduction
Controllinginventoriesisanimportantaspectofsupplychainmanagement.Managinginven-toriesofperishableproductsisdifficultbecauseoftheirlimitedshelflives.Thefixed-lifeperishabilityproblem(FLPPrequiresamulti-dimensionalinventoryvectortoaccountfortheageprofileofitems,whilecalculatinganoptimalinventorypolicy.Duetoperishability,thereisanadditionalcostofdisposalofoutdateditems,andthiscanalsoleadtoout-of-stocksituations,ifnotmanagedeffectively.Analternativetoavoidoutdatingistolowerthepricesofitemstostimulateincreaseindemand.Anotherreasonforloweringthepricesofitemsischangeinthetechnologyornewproductintroductionbyacompetitorwhichissuperiorto
∗For
correspondence
445

446AChandeetal
anexistingproduct.Thisisneededtoensurethatthemanufacturerdoesnotincurlossduetodeteriorationoftheitemsorduetoitswithdrawalfromthemarket.Pricepromotionisknowntobeaneffectivetoolwherethereisdemandelasticity(Lilienetal1999.
Theproblemconsideredhereisthefollowing:ineveryperiod,whethertopromotethepriceornotandtodeterminetheoptimalorderingquantity.Theproductconsideredisaperishableone,whichhastobewithdrawnfromthemarketafterafinitehorizon.Thevariouscostsconsideredareorderingcost,holdingcost,shortagecostandcostofdeterioration.Ifthereispricepromotion,thereisafixedcostofpromotionineachperiod.Itisassumedthatonceaproductispromoted,itwillremainpromotedtilltheendofthehorizon.Basedontheelasticityofthedemand,weassumesomedemanddistributionforthepricepromotedsituation,asalsoademanddistributionforthenormalcasewithoutpricepromotion.Manyvariantscenarioscanbemodelledinourframework,inadditiontotheonejustdescribed.
Ouralgorithmforthecontrolofinventoriesreliesonmonitoringoftheage-wiseprofileofinventoryineveryperiod.Thisisnowpossible,realisticallyspeaking,withtheintroductionofRFIDtechnology,aswediscussbelow.Computationallyspeaking,thisresultsinalargestatespacethatmakesthedynamicprogrammingformulationdifficulttoimplement,especiallyinthestagewiseoptimizationstep.Thisisaddressedbyanewapproximationwherewecollapsesomeinventoryvectorcomponents.
Theavailabilityofreal-timedatahasamajorinfluenceontheoptimalorderingquantityandtheoptimaltimeofpromotiondecision.Aninformationsystem,viewedfromaninfrastructuralandmanagerialperspective,hasvariouselementssuchasidentificationandcollectionofrelevantdataelements,communicationandprocessingofthedataatregularintervalsetc.(Raghuram&Rangaraj2003.RFIDtechnologyisanemergingtrendinthisfieldandismainlyusedforproductidentification,collectionandcommunicationofrelevantdata.ThispaperconsidersanRFID-basedmethodologyforinventorycontrolofperishableproductsandpricepromotions.RFIDtechnologyrequiresverylittleornohandlingofitemsandisthereforewellsuitedforinventorycontrolofperishableproducts.Thetechnologyalsohelpsinupdatingtheinventorystatusinrealtimewithoutproductmovement,scanningorhumaninvolvement.
Thepaperisorganizedasfollows.Thissectionsurveystheliteratureonperishableinventorycontrol,andsomemodelsonpricepromotions.ItalsoincludessomerelevantliteratureonRFIDtechnology.Thenextsectionexplainsthebackgroundforinventorymanagementinthecontextofperishableinventoryalongwiththeneedfordynamicpricing.Section3explainsthefixed-lifeperishabilityproblem.Section4focusesonRFIDsystemsandtheirimpactonthevaluechain.In§5,anRFID-basedarchitectureformanagingperishableinventoryandtheassociatedpricingproblemisdescribed.1.1Literaturereview
1.1aPerishableinventorymanagement:Theobjectiveofperishableinventorymanagementistoobtainoptimumreturnsconsideringtheusefullifeoftheproduct.Intheliterature,inven-torymodelshavebeenformulatedforperishableproductssubjectedtothevariousdemandconditionsandlifeconsiderations.Whenthelifeoftheproductisjustoneperiod,theprob-lemreducestothewell-known‘newsvendor’problem.Whendemandisrandomandproductlifetimeexceedsoneperiod,determiningorderingpoliciesisdifficultsincevariousstatesofdeterioration(oragesofproductmustbeknownineachperiod;inshortthestatevectorofinventorymustincludetheage-wiseprofile.Goyal&Giri(2001havesurveyedtheliteratureonproblemsofvarioustypes,todowithdecaying,fixed-lifeandrandomlifeofitems.Nah-mias(1974andFries(1975haveanalysedfixed-lifeperishableinventoryproblemsunder

InventorymanagementanddynamicpricingusingRFIDtechnology447
variousconditions.Weiss(1980presentstheprobleminacontinuousreviewframework,consideringallcostsconcernedwithordering,holding,shortage,disposal,penaltyandrev-enueinlostsalesandbackorderingcases.Forthelostsalescaseheidentifiesacontinuousreview(0,Spolicyandforthebackorderingcaseacontinuousreview(s,Spolicyinthecaseoflinearshortagecost,asoptimalpolicies.
Apartfromdeterminingoptimalpoliciesforordering,theliteratureinthisareahasalsoaddressedrelevantmarketingdecisionsbasedonconsumerpreferences.Abad(2003consid-eredtheproblemofdynamicpricingandlot-sizingforaresellerwhosellsperishablegoods.Alsothepriceoftheproductcanbevariedwithintheinventorycycletotakeintoaccounttheageoftheproductandthevaluedropassociatedwithit.Adachietal(1999intheirpaperproposeaperishableinventorymodelwithconsiderationofdifferentsellingpricesofperish-ablecommoditiesunderstochasticdemand.Intheirmodel,differentlifetimesofperishablecommoditiesareprovided,andtheyconsideredthepossibilityofdiscriminatingsellingpricesforproductsofdifferentlifetimes.
InanothermodelbyLuo(1997,theimpactofmarketingstrategiessuchaspricingandadvertising,aswellasbackorderingdecisionsontheprofitabilityofthesystemisstudied.Themodelaimsatfindingtheoptimalorderquantityandorderuptolevelwherethedemandisafunctionofadvertisementandpriceelasticity.Themethodusedtofindthevaluesisanexhaustivesearchprocedure.Themodelshowsthatmarketingdecisionssuchaspriceandadvertisementfrequencyhadasignificantimpactontheprofitabilityofthesystem.
Chiu(1995formulatedacontinuousreviewperishableinventorymodelbasedonapprox-imationsfortheexpectedoutdating,theexpectedshortagequantityandtheexpectedinven-torylevel.Hedevelopeda(Q,rorderingpolicyunderapositiveorderleadtimewhentheobjectivefunctionisminimizationofthetotalexpectedaveragecostperunittime.Nahmias(1977,1982hasformulatedapproximationsforseveralcomplexstochasticinventorymod-els.Theapproximationsareformulatedforbothperiodicaswellasforcontinuousreviewoftheinventory.
1.1bRFIDtechnology:Bhaskar&Mahadevan(2004haveexplainedtheapplicationsofRFIDtechnologytovariousfieldsincludinginventorymanagement.RFIDcanbeappliedtocollectinformationinvarioussegmentsofthesupplychain.Karkkainen(2002explainshowRFIDtechnologyaffectstheretailsectorandthebenefitsofthedeploymentofthesuchtechnologyacrossthesupplychain.ImplementationissuesofRFIDtechnologyintheretailsegmenthasbeendiscussedbyYao&Carlson(1999.McFarlaneetal(2003showthatautomaticidentification(AutoIDtechnologyisadvantageousinthemanufacturingsectoralso.Walmart,aretailinggianthasalreadytakenstepstowardsRFIDtechnologybyaskingitsmajorsupplierstoadoptRFIDforcaseandpallet-loadshipmentsbyJanuary20051.Hellstrom(2004inhistechnicalreportanalysedhowandwhyvariouspackaginglogisticsactivitiesinretailsupplychainwouldbeaffectedbytheapplicationofRFIDtechnologyinthepackaging.2.Backgroundformodelling2.1Inventorycontrol
Inourframework,inventorycontrolreferstomonitoringtheavailabilityofmaterial,assigningittodemandsthathavearrivedandplacingordersforreplenishmentoftheproduct.All
1Anon
2005WalMartBeginsRFIDRollout.RFIDJ.availableathttp://www.rfidjournal.com/article/articleview/926/1/1/

448AChandeetal
theseactivitiesmaynothappencontinuously,oreveninalltimeepochs.Inventorycontrolisemployedinthecontextof“pull-based”orreplenishment-basedsystemswherethetriggerforplacinganorderisthecurrentinventorystatuswhichinturnisrelatedtothedemandforitemsinrecentperiods.Inventoryisamajorinvestmentinmostofthecompanies.Itstronglyinfluencestheinternalflexibilityoftheorganization,e.g.,byallowingproductionlevelstochangeeasilyandbyprovidinggooddeliveryperformancetothecustomers.Inventorycostsincludeworkingcapitalandstoragespacecostsaswellascoststodowithobsolescence,deteriorationandloss.
Inrecentyears,attentioninthemanufacturingindustryhasconcentratedoncustomerdemand-drivensystems.Inretailing,inventorymanagementattemptstoprovidehighdemandsandhighprofitstothecompanyaswellasgoodservicesandfreshitemstocustomersatlowcost.Inventorymodelsarecommonlyusedtodeterminewhenandhowmuchtoorderwhileoptimizingtheoverallorganizationalgoal,i.e.,maximizingthenetprofit.
Ouranalysisreferstoperishableaswellaspotentiallyobsoleteproducts.Perishabilityreferstothedecreaseinvalueorusabilityoftheproductovertimeduetotheinherentcharacteristicsoftheproduct.Iftherateofdeteriorationissufficientlylow,itsimpactonthemodellingofsuchinventorysystemscanbeignored.Perishableproductsduetotheirnatureimposeanadditionalconstraintofshelflifeinthemodellingofsuchinventorysystems.Themaximumusefullifeoftheproductistheshelflife.Anitemcanalsobelostbecauseofobsolescence.Obsolescenceinourcase,happensbecauseoftheintroductionofnewproducts,bytheorganizationoritscompetitors.Infact,intheillustrativeexamples,theproductisseentohaveastablemarket(ascharacterizedbystationarydemand,butiswithdrawnbytheorganizationforstrategicreasonsofstayingtechnologicallycurrent.2.2Dynamicpricing
Dynamicpricing,ingeneral,istheassignmentofdifferentpricestotheitemsofthesameproductcategory,consideringtheindividualcharacteristicsorthechangesoftheproductstatus.Inthispaper,forconcreteness,arestrictedtypeofdynamicpricingisconsidered,whereafixedpromotionalpricecanbeintroducedatthebeginningofaperiodandonceintroduced,continuestotheendofthehorizon.Thisisdoneinthecontextofafinitehorizondynamicprogrammingwhichinvolveswithdrawingoftheitemattheendofastipulatedperiod.
Aretailerfacesthechallengeofdealingwithunderstockingandoverstockinginthefaceofsupplyanddemanduncertainties.Understockingoftheitemsisgenerallymoreundesirableasthereislossofgoodwillofthecustomerandalsolossoffuturedemands.Overstockingleadstosomeextrastoragecostsandperhapsobsolescenceordisposalcostattheendofhorizon.Analternativetoavoidthedisposalofitemsistoputolderitemsonsale,withloweringofpricestoinducedemand.
Suchadynamicpricingsystemrequirestheidentification,location,andpreciseage-profilingofitems.Withtraditionalsystemstheseprocessesarecarriedoutmanuallyandthereforeareerror-proneandtime-consuming.RFIDtechnologyprovidestherequiredinfor-mationinadynamicmanner.Thiswouldallowtheretailertodynamicallyadjustpriceswithrespecttodemandsandstocklevelsandmaximizetherevenue.Dynamicpricingtogetherwiththeinternetandweb-enabledapplicationshasbeenusedinairlineindustries.Inretailing,RFIDtechnologytogetherwiththeinternetcanhelpreal-timedecision-making.
Forproductslikefood,perishabilitycanbecontrolledtosomeextentbyusingsophisticatedstoragetechnologies,perhapsinvolvinghigherinventory-relatedcosts.OntheotherhandforFMCGproducts,fashiongoodsandelectronicitems,thelifeofproductdependsonexternal

InventorymanagementanddynamicpricingusingRFIDtechnology449
factorssuchastechnologicaladvancement,newproductintroductionbycompetitor,seasonalchangesetc.Insomecases,theproductiswithdrawnfromthemarketaftersomefixedtime,suchasseasonalgoodse.g.,toys,orasastrategytoremoveoldversionsinordertopromotenewerversionsoftheproducte.g.,electronicitems.Weconsidercaseswherethereisaneedtoderiveoptimalpolicieswhichconsiderdeteriorationaswellasobsolescence,withtheoptionofpricepromotion.Promotioncanalsobeachievedbyadvertising,pricediscounting,coupons,giftwithpurchaseetc.,whichareinasenseequivalenttopricepromotion.
Dynamicpricing,byitself,isatopicofindependentinterest,andhasbeenreviewedinacompanionpaperinthisvolume(Naraharietal2005,inthecontextofe-business.Thishasaconcisesummaryofdifferenttypesofpricedifferentiation,manyexamplesofdynamicpricinganditsconnectionswithoperationalissueslikeinventorycontrolinthiscontext(e.g.Gallego&vanRyzin1994.Anotherrelatedareawheredynamicpricingisimportantisthatofyieldmanagement,inindustrieslikeairlines(e.g.Feng&Gallego1995.Here,thetradeoffsareofadifferenttype,capturingcapacityutilization(ratherthaninventoryholdingversusshortageandobsolescencecosts.
3.Fixed-lifeperishabilityproblem(FLPPunderpricepromotions
TheproblemstudiedbyKondaetal(2003isthepossibleintroductionofpricepromotionoverafinitehorizon,alongwithaperiodwiseorderingpolicyinthecaseofaperishableproductwithafixed-lifeofLperiods.Thedecisionvariablesare(aanindicatorvariablewhichindicateswhethertopricepromoteornot,and(btheoptimalorderingquantityineachperiod.Weconsiderscenarioswhereoncetheproductispromoted,itcontinuestobesotilltheendofthehorizon.Thisisnot,however,acrucialassumptioninourframework,andotherpossibilitiescanbemodelledeasily.Itisassumedthatdemandisfulfilledbythefirst-in-first-out(FIFOrule,asthiswillreducethenumberofunitsthatwillperish.Allitemsuptotheirshelflifeareassumedtobeofequalvaluetothecustomerandwillcommandthesameprice,whensold.
Letr(st,(a,ytbetheone-periodexpectedrewardinthetthstagefortheaction(a,ytinstatest;werepresentstatestby(x1t,x2t,...,xLtwhichistheinventoryvectoratthebeginningofperiodt,where,xitisthenumberofunitsinperiodthavingremainingshelflifeofiperiods,i=1,...,Landt=0,...,N,whereNislengthofplanninghorizon.Thevalueofaiseitherp(ifpromotionisofferedorn(ifpromotionisnotoffered.Letytbetheorderingquantityinanyperiodt.Ddenotesthemaximumdemand,utatherandomvariableofdemandinperiodtwithknowndistributionwhendecisionaismade,Ithemaximuminventoryanditthetotalinventoryonhandatthebeginningofperiodt,andjttheinitialinventoryon-handwhichistransferredfromperiodt−1tot.ThefixedcostofpromotionisKawhichisincurredintheperiodsinwhichtheproductispromoted.
Therewardineachperiodr(·,·takesintoconsiderationthesellingpriceofeachitemRa,linearorderingcostofcperunitordered,holdingcostofhperunitperunittime,shortagecostofsperunitshort,anddeteriorationcostofbperunit.Theone-periodexpectedrewardisgivenby
r(st,(a,yt=
D

using RFID technology

推荐内容

相关推荐