Impact evaluation of an automatic identificationtechnology on inventory management : A simulation approach with the focus on RFID

Abstract: Automatic identification system is a prominent technology used in warehouses to give managers real time information of their products and assistance to warehouse employees in keeping an accurate inventory record. This kind of assistance is needed as an inaccurate inventory leads to profit loss due to misplacement or other mistakes. This project cooperated with an organization called Stora Enso specifically one of their forest nursery to find a solution to improve their inventory management system. Their current inventory system is a manual process which leads to mistakes occurring that affects the inventory accuracy. This thesis project evaluates automatic identification systems to observe if the technology is a possible solution and aims to answer the research question ”What are the significant impacts an automatic identification system has on an inventory management system?”. From the automatic identification evaluation one system is picked for further evaluation and due to its advantages radio frequency identification (RFID) is picked. To evaluate RFID in a warehouse setting a discrete-event simulation was created that simulates the forest nursery’s warehouse. The simulation is then used to evaluate the impact of different RFID implementations and their respective cost. The simulation results show that just a simple RFID implementation can improve inventory accuracy and remove some of the mistakes a manual system has with a relatively low direct cost. It also shows that a full RFID implementation that gives full visibility of a warehouse can almost remove inventory mistakes however the cost analysis shows that it requires a large investment.