Operational inefficiencies in supply chains: Performance, coordination and the role of information systems

Misplaced inventory is a major operational inefficiency in supply chains and it happens when items are not in their designated places and hard to find in a store. In this thesis, we focus on misplaced inventory and inventory shrinkage, which is a special case of inventory misplacement. Information technology is facilitating significant reductions in these operational inefficiencies. However, such technologies are generally very expensive to implement. This dissertation intends to fill the gap of knowledge about the effects of operational inefficiencies in supply chains of various forms and the role of information systems in mitigating such inefficiencies that often get reflected in poor performance. We do this through three separate essays using analytical research methods.; In the first essay, "Coordination of a Supply Chain under Misplaced Inventory", we consider a supply chain where a proportion of the items ordered become unavailable for sale due to misplacement at the retailer. We investigate the effects of increasing the proportion of inventory availability at the retailer on the profits of the retailer and the manufacturer in vertically integrated and decentralized supply chains where we study uncoordinated and coordinated supply chains.; In the second essay, "Misplaced Inventory and RFID: Information and Coordination", we consider Radio Frequency Identification (RFID) technology to mitigate the negative effects of inventory misplacement. We consider both fixed and variable costs for RFID implementation and assume that the fixed cost is shared between the two using an arbitrary proportion while the variable cost could be charged to either the retailer or the manufacturer. We characterize the incentives of the parties in the supply chain to invest in RFID in vertically integrated, uncoordinated and coordinated supply chains.; In the third essay, "Inventory Management under Shrinkage and Customer-Driven Search", we consider a supply chain with a single supplier and two retailers under customer search experiencing shrinkage at the retailers, who face nonidentical random demands. Through a single-period model, we explore the effects of shrinkage and competition on the equilibrium stocking decisions and characterize conditions for the parties to benefit from a unilateral reduction in shrinkage.