| Inventory record inaccuracy occurs when there is a difference between the actual and the recorded inventory causing excess inventory to be held within a supply chain and thus adds to total supply chain cost. In this thesis, we present a simulation for a two-echelon inventory system with the use of cycle counting as the corrective action when inventory records are inaccurate. The simulation model allows the quantification of the costs associated with inaccurate records, calculation of accuracy and discrepancy measures for the retailer across the item types as well as the tabulation of the cost of cycle counting. The model involves a two-echelon inventory system consisting of one retailer, one distribution center, and one supplier with multiple types of items. It includes the simulation of the inventory fulfillment process, activities involving cycle counting, as well as the transportation between the locations. An extensive set of cycle counting configurations were examined while observing the trade-off between fill rates, accuracy and system costs. The objective is to investigate the best possible configuration of cycle counting given a set of SKUs to cycle count. We illustrate the use of the model through two sets of experiments that examine high demand-low cost and low demand-high cost items. The results indicate that the correct application of cycle counting will increase record accuracy and provide a significant amount of savings for the entire supply chain. |
