Evolution of Automatic Ordering System in Retail Market : Analyzing Inventory Data

Paik, SiHyun;Frazier, DeWayne P.;Mark, Isenhoff

  • Received : 2015.06.02
  • Accepted : 2015.11.05
  • Published : 2015.12.31


The purpose of this paper is to reveal two problems in the existing inventory systems in retail market, and to suggest a Two-Bin System under Automatic Ordering System considering only base-stock. Large retailers already have a sophisticated inventory system based on an automatic ordering principle. However, why does the out-of-stock (OOS) happen in large discount stores in spite of having a good inventory system? This paper suggests two systems after finding the root causes concerning the previous question. For evaluating the performance of each system, the random 200 data set in each sample group was generated from MINITAB 16 and obeyed the Poisson distribution. The existing inventory system in retail market cannot help generating OOS due to indwelling contradiction in itself. The reasons are the ordering deadline and the relationship between ordering quantity and base stock. This paper also demonstrates that these previous studies on inventory fall into the closed loop. Also the paper shows that the performance of the replenishment policy was better than traditional methods dealing with ordering quantity and base stock.


Inventory management;Supply chain management;Retail;Automatic ordering system


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