Gary M. Gaukler

Applications of RFID in Supply Chains

In this chapter, we first give an introduction to radio-frequency identification (RFID) technology. We discuss capabilities and limitations of this technology in a supply chain setting. We then present several current applications of this technology to supply chains to demonstrate best practices and important implementation considerations. Subsequently, we discuss several issues that may hinder widespread RFID implementation in supply chains. We close by deriving several consequences for successful implementation of RFID, and we give guidance on how a company might best benefit from this technology.

Item-Level RFID in a Retail Supply Chain With Stock-Out-Based Substitution

In this paper, we present a model to help evaluate the impact of an introduction of item-level radio-frequency identification (RFID) in a retail environment where stock-out-based substitution is common. There are two main thrust areas in this work. First, we examine the impact of RFID in a centralized setting where retailer and manufacturer are one entity. This thrust area is concerned with evaluating the profitability of RFID and exploring which product properties favor an RFID implementation. Second, we examine the impact of RFID in a decentralized setting, where retailer and manufacturer independently maximize their profits. We investigate the problem of sharing the costs of RFID, from both the perspective of tag costs and fixed costs. Our research shows that the presence of substitution at the shelf plays a major role in determining the expected benefits of an RFID implementation, as well as in determining the optimal allocation of these benefits among retailer and manufacturer. It is therefore critically important that decision makers make strong efforts to correctly account for subsitution effects when evaluating potential item-level RFID implementations in the retail sector.

RFID in mixed-model automotive assembly operations: Process and quality cost savings

This research shows how to characterize the potential operational benefits of RFID in a complex automotive assembly system. Both process savings and quality (rework) savings are included in the presented model and it is demonstrated that process savings and quality cost savings are strongly interdependent. Indeed, a trade-off exists in which the decision maker has to decide whether to allocate time savings afforded by RFID to process time savings, or to allocate those time savings to potential quality cost savings. It is shown how this allocation decision can be solved such that the maximum expected cost savings are achieved. From the structural properties of this optimal solution, it is concluded that an RFID implementation will tend to yield the most benefit in a fast-paced complex assembly environment where: (i) total assembly times are substantial; (ii) tact times are low; (iii) there is little to no worker idle time; and (iv) rework is present and costly. How to evaluate the impact of an RFID implementation in terms of the net present value of cost savings is demonstrated. The model framework is applied in a numerical example to study a situation at a car manufacturer and the main results are reported.

Detecting nuclear materials smuggling: using radiography to improve container inspection policies

This paper proposes a layered container inspection system for detecting illicit nuclear materials using radiography information. We argue that the current inspection system, relying heavily on the Automated Targeting System (ATS) and passive radiation detectors, is inherently incapable of reliably detecting shielded radioactive materials, especially highly enriched uranium (HEU). This motivates the development of a new inspection system, which is designed to address a fundamental flaw of the ATS-based system, allowing for improved defense against sophisticated adversaries. In the proposed inspection system, all cargo containers go through x-ray imaging equipment first. From the x-ray image, a hardness measure of the container is computed. This hardness measure characterizes how likely it is that shielded HEU, if it does exist in the container, will not be detected in a subsequent passive detection step. Depending on the value of the hardness, the lower-hardness containers are sent to passive detection and the high-hardness containers are sent directly to active detection. This paper explores the trade-off between the detection probability of the new inspection system and the expected sojourn time a container spends in the system. The solution details and decision-making tools for using such a system are provided. Comparisons are made between the proposed system and the current ATS-based nuclear inspection system.

Preventing avoidable stockouts: the impact of item‐level RFID in retail

Purpose – This paper aims to characterize some of the operational benefits of item‐level radio‐frequency identification (RFID) in a retail environment.Design/methodology/approach – The paper examines a retail store operation with backroom and shelf stock under the assumption of multiple replenishment and sales periods. Backroom stock is replenished according to a periodic‐review order‐up to policy and shelf stock is replenished continually from the backroom. Backroom replenishment decisions are made based on demand forecasts that are updated in each sales period based on previous sales. The influence of item‐level RFID is two‐fold: first, it directly affects the number of products sold through the efficiency and effectiveness of the backroom‐to‐shelf replenishment process. Second, it indirectly affects the retailers demand forecast: ceteris paribus, more products sold mean a higher demand forecast, which means a higher order‐up to level in the backroom.Findings – This study confirms that the direct effec...

RFID Tag Cost Sharing in the Retail Supply Chain

In this research, we study some of the operational benefits of item-level radio frequency identification (RFID), and how these benefits may affect the dynamics of the retailer-manufacturer interaction. We describe a retail operation with backroom and shelf stock under the assumption of multiple replenishment and sales periods, where backroom stock is replenished according to a periodic review order-up to policy and shelf stock is replenished continually from the backroom. In this environment, retail shelves are outfitted with RFID readers to continually monitor the remaining stock on the shelves and issue low-stock and replenishment alerts to store personnel so that shelves can be replenished from the store backroom before actual sales are lost at the shelf. We are interested in the dynamics between retailer and manufacturer with respect to the cost of item-level tagging the products. Of interest is the way in which the cost of tagging the product is divided among the two supply chain partners. To do this, we investigate a supply chain in which power is distributed asymmetrically among manufacturer and retailer. This interaction is modeled using the Stackelberg game framework. From an analysis of this framework, we derive several properties of interest, relating to the appropriate division of tagging cost as well as to a life-cycle centric view of RFID implementations.

A stochastic optimization model for positioning disaster response facilities for large scale emergencies

In this paper, we present a two-stage stochastic program for locating disaster response facilities. Our modeling approach is unique in the literature in that it explicitly correlates the functioning of a facility with a particular disaster scenario. In particular, in our model the functioning of a facility is directly affected by its distance from the disaster epicenter. This represents an important modeling aspect of emergency facility location that to date has been ignored in the existing literature. To demonstrate the potential contributions of our model, we present a computational case study of (earthquake) disaster response facility location for the state of California. Our computational results show the distinct changes in the optimal location of facilities. Instead of placing facilities directly on top of some of the highest-risk areas (the traditional k-median solution), our model tends to place facilities still close to population centers, but farther away from high-risk areas.