We propose a simple explanation for price rigidity in perishable groceries: inventory record inaccuracy (IRI). We build our argument in two steps. First, we tailor Gallego and Van Ryzin’s (1994) revenue management model to perishable groceries by adding an inventory waste process,...

We present a continuous-time stochastic formulation of the standard Economic Order Quantity (EOQ) model incorporating all major costs incurred in carrying a product, including the cost of restocking, the cost of auditing the shelf stock level, the opportunity cost of capital, the cost of loss...

Problem definition. We present a continuous-time Bayesian model for managing inventory in a retail setting when inventory records are inaccurate. In our formulation, the inventory level and its record have separate dynamics. The former is driven by the demand and unobservable loss process while...

We present a continuous-time stochastic model of an inventory system with record inaccuracy. In this formulation, demand is modeled by a point process and is observable only when it leads to sales. In addition to demand that can reduce the stock, an unobservable stochastic loss process can also...