A comparison of RFID-based shelf replenishment policies in retail stores under suboptimal read rates

Abstract

The use of Radio Frequency Identification (RFID) as a tool for improving shelf replenishment processes in stores has attracted the interest of several retailers. However, the performance of RFID-based inventory control policies is influenced by a variety of design choices, technology characteristics, and external influences. The present simulation study aims to analyze and discuss the impact that these factors exert on the economic efficiency of RFID. We consider policies for RFID tagging on both the item level and the case level and compare these to a traditional replenishment process using periodic reviews. Our model incorporates shelf stock information generated by RFID and accounts for imperfect read rates and technology-specific costs. Our results indicate that significantly different sensitivities to cost and time-related factors, demand rate, and read rate must be considered when choosing a particular policy. Moreover, we discuss the consequences of model extensions and additional constraints on process performance. The results support both researchers and practitioners in the modeling and implementation of RFID-based inventory control systems.