Empirical evaluation of IRI mitigation strategies in retail stores

Abstract

This study evaluates the effectiveness of mitigation strategies currently employed by retailers to manage operational issues related to inventory record inaccuracy (IRI) in retail stores. A simulation study of different IRI mitigation strategies, grounded in empirical data, indicates varying levels of amelioration across items with different IRI profiles within the store inventory. The cumulative negative effect of inventory errors is shown to be strong enough that adding more inventory to match the error rate would not recover the corresponding loss in inventory position. On the other hand, a replenishment-based approach works better at mitigating the effect of inventory errors. The study concludes that correcting IRI errors through technology-driven inventory audits would be the best approach for retailers to improve store performance as compared to other mitigation strategies.

Keywords:

• Inventory record inaccuracy
• inventory audit
• retail store

Disclosure statement

No potential conflict of interest was reported by the authors.