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Inventory Management Under Product Misidentification/ Shipment Errors

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Executive Summary

Wrong-product delivery - the delivery of a product different from that desired - is a significant, but as yet unexplored problem in supply-chain management research. There are basically two reasons for wrong-product delivery: either the wrong product is mistakenly ordered or the right product is ordered but the wrong product is picked/shipped. This paper defines and analyzes the "Wrong-product delivery" problem using a 2-product newsvendor model. Two non-substitutable products may be ordered at the beginning of each time period. However, whenever product i is ordered, then with known probability i, product j is delivered; i, j = 1, 2(i 6= j).

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