ARTICLE IN PRESS

Int. J. Production Economics 125 (2010) 313323

Contents lists available at ScienceDirect

Int. J. Production Economics

journal homepage: www.elsevier.com/locate/ijpe

An investment evaluation of supply chain RFID technologies:

A normative modeling approach
In Lee a,, Byoung-Chan Lee b
a
Department of Information Systems and Decision Sciences, College of Business and Technology, Western Illinois University, Stipes Hall 431, Macomb, IL 61455, USA
b
Department of Business Administration, Graduate School, Keimyung University, Taegu, South Korea

a r t i c l e in fo abstract

Article history: As Radio Frequency Identication (RFID) technology advances rapidly and major retailers start to push
Received 24 April 2009 their suppliers to adopt the technology, RFID costbenet analysis has become a subject of great focus.
Accepted 13 February 2010 RFID complements or replaces barcode systems and traditional manual tracking systems to identify,
Available online 18 February 2010
retrieve, track, and store merchandise automatically. The adoption of this technology is gaining
Keywords: momentum rapidly as technological, societal, and competitive pressures push rms to transform and
RFID innovate themselves. Because of the potential benets gained and high investment costs incurred by
Supply chain RFID, rms need to carefully assess every RFID opportunity and challenge to ensure that their resources
Investment are spent judiciously. This paper presents the Supply Chain RFID Investment Evaluation Model, and
provides a basis for enhancing our understanding of RFID value creation, measurement, and ways to
maximize the value of RFID technology. A future research direction is also discussed.
& 2010 Elsevier B.V. All rights reserved.

1. Introduction
Global competition, short product life cycle, and information
technology (IT) advances have rapidly changed the ways rms
operate their businesses. These changes have driven rms to cut
costs, innovate their products/services, and redesign their busi-
ness processes. Radio Frequency Identication (RFID) technology
is one of the emerging technologies that are being used by a
number of organizations such as manufacturers, retailers, logistics
providers, hospitals, and libraries. The timing and magnitude of
the RFID adoption and related process redesign have become
more critical than before as rms strive to use RFID technology at
an unprecedented rate.
RFID technology shows great potential for process improve-
ment and cost reduction related to supply chain management.
The supply chain has become the central organizing unit in
todays global industries (Miles and Snow, 2007). Furthermore, in
todays environments in which competition is among supply
chain networks rather than individual rms, rms are confronted
with the need to effectively manage increasingly extending
supply chain activities beyond the boundary of the rms
(Patnayakuni et al., 2006). As rms extend supply chain activities
beyond the boundary of the rms, the need for new inter-rm
information technologies has increased signicantly. RFID technology
 Corresponding author.
E-mail addresses: I-Lee@wiu.edu (I. Lee), bclee@kmu.ac.kr (B.-C. Lee).
is the most advanced technology for supply chain integrity and
traceability (Kumar and Budin, 2006). As evidenced by Wal-Marts
recent RFID mandate to its suppliers, RFID has received signicant
attention as a viable supply chain management technology. RFID
invested in supply chain is expected to enhance information
sharing and collaboration between supply chain partners due
to its automated data collection and transmission capabilities.
A recent case study on a system of integrating mobile commerce
and RFID applications illustrates that the RFID provides greater
visibility of the operations data and improves the control
processes (Ngai et al., 2007).
RFID technology management is a process of evaluating RFID
technology, developing RFID systems, and managing RFID infra-
structure to achieve business objectives. In the evaluation stage of
RFID technology, managers identify potential business processes,
explore different technologies, assess the costbenets of alter-
native technologies, and choose the best technology. Despite the
popularity of RFID technology, the disappointingly slow return on
RFID investment forced senior managers to scrutinize the
investment opportunity more closely and to reshape their existing
RFID initiatives. As RFID projects often compete with other
IT projects for the scarce resources, the fundamental questions
for RFID adoption are whether RFID technology can create a value
that will justify its investment, and how the RFID value can be
measured.
However, despite the urgent need for a solid evaluation
method in the industries, RFID valuation methods have not been
fully developed, and measuring RFID value has been elusive for

0925-5273/$ - see front matter & 2010 Elsevier B.V. All rights reserved.
doi:10.1016/j.ijpe.2010.02.006
 ARTICLE IN PRESS
314 I. Lee, B.-C. Lee / Int. J. Production Economics 125 (2010) 313323
managers. Traditionally, accounting and nancial methods have
been widely used to assess the value of projects. Return on
investment (ROI), net present value (NPV), and payback period
methods are classic in accounting and nancial literature.
However, the traditional accounting and nancial methods have
played a limited role in justifying the RFID investment opportu-
nities, because many of its benets are non-quantiable.
In light of the ongoing debate on the measurement methods
for RFID investment, this study provides an overview of existing
evaluation studies, presents the Supply Chain RFID Investment
Evaluation Model, and discusses a future direction for researchers
and practitioners. The major contribution of our research is that
we have identied three supply chain RFID investment factors
and developed analytical procedures to derive optimal RFID
investment levels for these factors. Our paper proceeds with
literature review in Section 2, the evaluation model in Section 3,
an analysis of the investment model with an illustrative scenario
in Section 4, and the conclusion in Section 5.
2. Literature review
According to the latest market data from ABI Research (2009),
total revenue earned from RFID transponders, readers, software
and services will amount to more than $5.6 billion in 2009. The
growth prospect of RFID industry is noteworthy in the IT industry.
The global industry for RFID technology has been growing steadily
and is expected to grow rapidly before stabilizing and settling on
a steady growth path. The RFID market is forecasted to grow at a
moderate compound annual growth rate (CAGR) of around 20.7%
during 20082016 (RNCOS Group, 2007). These statistics suggest
that RFID has become one of the most important IT investment
opportunities for rms, and thus RFID investment deserves
special attention from management. Reasons for the growth of
RFID investment include cost savings, reduction of production
costs of RFID tags, and mandatory policies of some mega retail
chains such as Wal-Mart, Tesco, and Target, to name a few.
Like other IT value measures, RFID business value includes lead
time reduction, productivity improvement, cost reduction, in-
creased revenue, customer satisfaction, competitive advantage,
inventory reduction, and other metrics of performance (Michael
and McCathie, 2005; Angeles, 2007; Veeramani et al., 2008). Dutta
et al. (2007) examined three dimensions of the value proposition
of RFID as an initial roadmap to ongoing research: the generic
architecture of RFID implementations and the drivers of value,
measurement issues, and incentives for achieving diffusion.
Large organizations such as the US Department of Defense,
Wal-Mart, Tesco, and Target have driven the adoption of RFID
technology by their mandate for their major suppliers to tag their
merchandises. However, a recent survey shows that the cost of
the tags and hardware, and the availability of these components
are the main issues hampering the widespread adoption of the
technology by suppliers (Vijayaraman and Osyk, 2006). Many
organizations take a wait and see stance and hope to learn more
from the early adopters, since the suggested benets of RFID are
still uncertain while RFID technology requires signicant up-front
investment (Reyes and Jaska, 2007). While most of the RFID work
has focused on logistics and inventory management applications,
the potential of RFID in other areas of operations, such as
manufacturing, after-sales service support, and total product life
cycle management, is also great (Lee and Ozer, 2007).
2.1. Supply chain RFID
Supply chain RFID is an emerging application that has
attracted a lot of attention from researchers and practitioners in
the US, Europe, and Asia (Soon and Gutierrez, 2008). RFID allows
automatic identication and data capture using radio waves, a
tag, and a reader. The tag can store more product data than
traditional barcodes (Jones et al., 2004). The tag contains product
data in the form of Electronic Product Code (EPC), a global RFID-
based item identication system developed by the Auto-ID
Center. Product data the RFID tag stores include product ID,
production location, production date, and shipping container ID.
A number of studies view information sharing as one of the major
supply chain management activities (Min and Mentzer, 2004;
Morton et al., 2006; Krause et al., 2007). RFID technology enables
supply chains to easily and inexpensively collect and share
information, thus enhancing supply chain visibility. The enhanced
supply chain visibility leads to reduced stock-out, lower labor
costs, reduced transaction costs, and improved inventory manage-
ment in their supply chains (Twist, 2005).
In addition to the above-mentioned data storage and informa-
tion sharing capability, RFID improves information quality sig-
nicantly. Managers may not use information provided from
supply chain partners if they do not have condence in information
quality, and furthermore will not share their own information with
their partners. While RFID technology is known to provide more
accurate, current, and reliable information to supply chain partners
than the traditional barcode technology, which leads to a better
collaboration among supply chain partners, challenges such as
false read, data overload, real-time acquisition of data, data
security, and privacy must be dealt with (Bose and Lam, 2008).
2.2. RFID valuation methods
As RFID research is relatively new and there is a growing body
of RFID evaluation studies, we rst review existing IT evaluation
methods and attempt to link these studies to the RFID evaluation.
Many studies have focused on the ex post evaluation of IT value
and theory building based on empirical data. Our review focuses
on the ex ante IT evaluation methods which are used to predict
IT value before investment occurs, since the ex ante IT project
evaluation methods are of greater practical use to IT managers.
Most IT justication studies point out the limitations of
traditional capital budgeting methods in measuring the true
value of IT (Clemons, 1991; Kumar, 2004). Consequently, many
IT investments are based upon gut feelings or intuition, rather
than quantiable criteria (Dos Santos, 1991). However, given the
nancial impacts of IT investments and tight budgetary constraints,
it is essential for IT managers to clearly understand whether their
investments are nancially justiable, and likely to yield sufcient
benets or fail. Managers need to take into account such factors as
tangible and intangible benets and the costs of undertaking the
program, the risks of proceeding with the program, the expected
competitive impact, and the possible need for partnership with
competitors (Clemons, 1991). The involvement of the relevant
business functions in translating non-quantiable benets into
monetary value is also recommended (Tiernan and Peppard, 2004).
A recent study of 130 senior executives from large companies
that spend an average of $230 million annually reported that 51%
of respondents have no process to evaluate IT investments against
business strategy; 68% do not compare their IT projects benets
to original targets; 74% do not track nancial metrics after making
an investment decision; and 80% lack the necessary nancial skills
(Chabrow, 2003). The lack of necessary measurement and analysis
skills by the senior executives potentially leads to misalignment
of IT and business strategies, over- or underinvestment, inoppor-
tune investment, and eventually the lowered productivity and
decreased IT investments. The implications of this survey results
are signicant as the executives are the ultimate sponsor and
 ARTICLE IN PRESS
I. Lee, B.-C. Lee / Int. J. Production Economics 125 (2010) 313323
champion of IT projects. In light of the signicant lack of
IT valuation knowledge by the senior executives, it is urgent that
IT researchers and professionals develop an education program to
deliver executives the needed knowledge and skill sets.
A wide range of other IT pre-investment justication meth-
odologies have been developed by researchers and practitioners
including: index and ranking methods (Sethi et al., 1993),
business process simulation (Lee, 2004), option theory (Bardhan
et al., 2004; Dixit and Pindyck, 1995; Dos Santos, 1991), analytical
hierarchical process (AHP) (Goh, 1997), balanced scorecard
(Kaplan and Norton, 1992), IT portfolio management (Bardhan
et al., 2004; Jeffery and Leliveld, 2004), business case (Ross and
Breath, 2002), game theory (Zhu and Weyant, 2003), technology
road-mapping (Groenveld, 1997), Activity Based Costing method
(Peacock and Tanniru, 2005), and total value of ownership
(Luftman and Muller, 2005). The challenge for IT managers is
that the success of the translation of non-quantiable benets
into nancial metrics often depends on the choice of justication
methods and the validity of the assumptions made.
Relatively new to the eld, the RFID evaluation methodologies
have been a focus of a number of studies. However, there have
been no instruments for an accurate and fast feasibility study that
takes into account the critical variables for the application of the
RFID technology (Ngai et al., 2008). As in many other IT projects,
one of the barriers to the adoption of RFID by organizations is the
difculty in assessing the potential ROI (Veeramani et al., 2008).
Much of the research and analyses of ROI in implementing RFID
technology have focused on the benets to the retailer (Rekik
et al., 2008). Practitioner-oriented guides for calculating ROI for
RFID investment illustrate the risk, cost, and benets of RFID
investments using two hypothetical companies and an invest-
ment scenario (RFID Wizards Inc., 2009).
Doerr et al. (2006) report on an analysis of the costs and benets
of elding Radio Frequency Identication/MicroElectroMechanical
System (RFID/MEMS) technology for the management of ordnance
inventory. They combine a multi-criteria tool for the valuation of
qualitative factors with a Monte-Carlo simulation of anticipated
nancial factors. Analytic Hierarchy Process (AHP) methodology is
also employed as a decision analysis mechanism to analyze the
RFID adoption decision processes of both RFID expert and industry
evaluators and to assist organizations to judge if they are suitable
to adopt the RFID systems (Lin and Lin, 2007). An analytical
approach was also attempted for the RFID evaluation. An exact
analytical expression was applied to derive for the break-even
prices of an RFID tag, considering both the shrinkage fraction and
the impact of RFID technology (de Kok et al., 2008). The analysis
shows that the break-even prices are highly related with the value
of the items that are lost, the shrinkage fraction and the remaining
shrinkage after implementing RFID.
A number of simulation studies were conducted to assess the
impacts of RFID on the supply chain (Wang et al., 2007; Bottani and
Rizzi, 2008; Ozelkan and Galambosi, 2008; Ustundag and Tanyas,
2009; Bose+ et al., 2009). A simulation of an integrated RFID system
on a three-echelon supply chain shows that increasing product
value increases the total supply chain cost savings, and the
increased demand uncertainty decreases the supply chain cost
savings (Ustundag and Tanyas, 2009). The results indicated that
each member of the supply chain does not benet equally from
RFID integration, the retailer has the highest cost savings, and
increasing lead time decreases the total supply chain cost savings
of the retailer. Since commonly used nancial methods such as
Discounted Cash Flow (DCF) and NPV calculations are too limited
to make RFID investment decisions, a real option approach was
proposed as an alternative method for valuing RFID investments
(Patil, 2004). The real options approach may build a strong
business case for RFID investments due to the fact that the value
315
of RFID adoption would change over time because of the future
uncertainty involving IT. The RFID system should be exibly
designed to tap new opportunities that may arise, and to avoid the
risk of heavy up-front investment in the technology.
To assess the impact of RFID technology on the tier-one
suppliers, Veeramani et al. (2008) present a framework and
models which measure ve benet areas: lower operating costs,
increase in revenue, lower overhead costs, reduced inventory
capital cost, and lead time reduction. In order to address the
discrepancy between expected and realized benets of RFID
investment, potential benets and risks are also explored
(Michael and McCathie, 2005).
Business Process Reengineering (BPR) has been investigated in
line with the use of RFID technology. Business value of RFID
technology can be derived through rening business processes and
expanding the business model (Bose and Lam, 2008; Tzeng et al.,
2008). A eld study conducted in the utility industry shows how
process optimization can be achieved when integrating RFID
technology into information systems applications (Bendavid
et al., 2006). A case study in the retail industry indicates that RFID
technology can cancel, automate, or automatically trigger some
business processes (Wamba et al., 2008). In supply chains, partial
information sharing can be achieved with the use of RFID tags, and
the use of a bidirectional billing system is suggested to share cost
and benet among supply chain partners (Uckelmann et al., 2009).
Simulation is exploited as a tool to investigate reengineering of
RFID logistics processes and protability (Bottani, 2008; Ozelkan and
Galambosi, 2008). A simulation study on the RFID-enabled storage
management of vehicles of an automobile terminal of E.H. Harms
Automobile-Logistics shows that establishing autonomous control
leads to higher performances such as short lead times or high due
+ et al., 2009). An empirical study at Wal-Mart
date punctuality (Bose
stores shows that RFID-enabled inventory management processes
reduce inventory inaccuracy when RFID is used as a supplement to
existing manual adjustment processes (Hardgrave et al., 2009).
Our literature review shows that RFID is in an early stage of the
technological diffusion and is projected to grow rapidly with the
phenomenal advancements in wireless communication technolo-
gies. Most of the above-mentioned studies are descriptive in nature.
Our literature review shows that there exists no analytical
normative RFID evaluation model. RFID is entering into the main-
stream information technology arena. As RFID innovations drive
organizational transformations, researchers and practitioners need
to understand the implications of these technological and organiza-
tional changes. Given the growing interests in RFID investments by
managers, researchers need to develop theories and measurement
tools that will help managers apply knowledge gained from the
research to make a judicious RFID investment decision and to
enhance the RFID value. In an attempt to ll a gap in the current
descriptive studies, our study provides a normative investment
evaluation model for Supply Chain RFID technologies, capture
intangible benets and integrate them into the objective function,
and investigates the relationships between model input parameters
(e.g., demand, RFID cost functions), decision variables (e.g., RFID
investment level), and result variables (e.g., total cost savings and
benets). While this study focuses on the supply chain RFID
investment, our model can be extended to other domains such as
governments and libraries.
3. The Supply Chain RFID Investment Evaluation Model
In this section, we introduce the Supply Chain RFID Investment
Evaluation Model and examine relationships between model
parameters and the degree of RFID investment. The proposed
model is not only useful in its own right, but it also underscores
 ARTICLE IN PRESS
316 I. Lee, B.-C. Lee / Int. J. Production Economics 125 (2010) 313323
the feasibility of using analytical models in the eld of RFID
investment. Given the current trend of RFID technology adoption,
IT managers should be concerned about its effectiveness and
efciency for organizations. However, the evaluation of the RFID
investment in supply chain is one of the weakest research areas
and no analytical decision-making framework for the supply
chain RFID investment exists. In the following subsections, we
also present an analytical framework for estimating the optimal,
cost minimizing supply chain RFID investment level.
The Supply Chain RFID Investment Evaluation Model is based on
the classic economic order quantity (EOQ) model that is widely
used in manufacturing and inventory management. The rationale
for using EOQ as a ground for our RFID investment analysis is the
need to measure the direct impact of RFID on the ordering cost and
inventory holding cost. The fundamental concepts of EOQ model are
suitable for the tradeoff analysis between the RFID benets and
costs. Since differences exist in the cost structure between the EOQ
model and the supply chain RFID investment, our decision model
takes into consideration a cost function and cost components that
are unique to the RFID investment. Since differences exist in the
cost structure between the EOQ model and the supply chain RFID
investment, our model takes into consideration a cost function and
cost components that are unique to the RFID investment. The model
allows us to determine the optimal investment level in supply chain
RFID technology that minimizes the total cost.
The classic EOQ model identies the optimal order quantity that
minimizes the total inventory management cost. While the EOQ
model consists of setup cost and inventory holding costs, our model
considers three unique RFID investment factors of ordering
efciency, Just-In-Time (JIT) efciency, and operating efciency. O xed order cost per order cycle
Ordering efciency is realized by minimizing any inefciency related
to the ordering activities, and it is typically dependent on the
intensity of the RFID technology. RFID improves ordering efciency
in various ways. For example, receiving accuracy reduces the count/
recount in the delivery and speeds up the order fulllment.
Companies no longer need to open the box and spend long and
tedious hours counting and recounting products. The loss of
incoming materials is minimized. The movement of ordered
products to the warehouse and production oor is smooth.
While the EOQ model assumes that an instantaneous delivery of
the entire batch of order quantity takes place at the beginning of the
Table 1
Category of costs related to supply chain inefciency and RFID benets.
Factors Costs related to supply chain inefciency
Ordering efciency Detecting irregular items entering the supply chain
Handling counterfeited items
Resolving dispute of inaccurate invoicing
Handling defective items
JIT efciency Managing the excess inventory or
safety stock levels
Handling back orders
Operating efciency Inaccurate inventory counts in the warehouse/
distribution centers
Unreported stock loss
Mislabeling
Inaccessible/misplaced inventory
Resolving inventory count discrepancy
Managing inventory loss/shrinkage/spoilage/
obsolescence
Tracking consumer buying patterns and ensure
products are on shelves
Identifying defective items on shelves
periodic order cycle, JIT efciency narrows the timing gap between
delivery of goods/parts and actual consumption/production. JIT
efciency reects more accurately the RFID advantages of better
inventory management, and it can be improved with the RFID
wireless merchandise tracking capability. Operating efciency is
achieved by managing the individual goods/parts efciently. For
example, operating efciency is improved by the RFID merchandise
monitoring capability. The costs related to supply chain activities
and RFID benets are summarized in Table 1.
Since the decision variables in the RFID investments are
investment costs, an in-depth understanding of the cost compo-
nents is necessary. Since the cost of an RFID implementation is
one of the most serious concerns for managers, the estimation of
the total investment cost requires a thorough investigation of
individual cost components. Table 2 presents the list of costs
relevant to RFID investment. There are ve cost categories:
hardware (e.g., tags, readers, printers, and network infrastructure),
software (e.g., middleware, labeling/automation equipment),
development (e.g., testing, installation, and communication),
training, and services. These cost categories are further divided
into initial investment costs and recurring costs. The cost of
individual RFID components varies, depending on the complexity
of technological features. For example, the cost of tags is usually
based on the volume, the amount of memory on the tag, and the
packaging of the tag.
Next we introduce the nomenclature we use throughout this
paper and discuss a model formulation.
Nomenclature
H annual inventory holding cost per unit
D annual demand
C operating cost per unit
R ordering efciency
I JIT efciency
J operating efciency
K investment level for ordering efciency
V investment level for JIT efciency
X investment level for operating efciency
d daily delivery rate
c daily consumption/production rate
RFID benets
Improved accuracy and visibility of inventory data throughout
the supply chain processes
Automated counting and accurate put-away
Automated reconciliation of dispute
Automated verication processes
Improved lead time management; enhanced cross docking
operations
Enhanced visibility of inventory level and customer demands;
improved ability to meet daily demand
Reduction in inventory counts
Accurate real time tracking of products moving in the supply chain
Automated tagging
Improved inventory tracking
Automated reconciliation and control of inventory
Improved monitoring and tracking of goods
Improved customer service due to timely delivery of goods
Reducing the cost of defective items reaching consumers
 ARTICLE IN PRESS
I. Lee, B.-C. Lee / Int. J. Production Economics 125 (2010) 313323 317

Table 2
Categories of RFID investment costs.

Categories of costs Initial investment costs Recurring costs

Hardware Tags, readers, antennas, transponders, sensors, printers, network Upgrade, maintenance, move, change
infrastructure, RFID host server, labeling/automation equipment
Software Data collection software, data management software, middleware Upgrade, maintenance, move, change, system
printer/encoder management software, RFID tracking applications, integration costs with existing systems
event sensor software, condition monitoring applications, network
appliance software, RFID edgeware
Development Infrastructure development, testing, installation, documentations Internal technical staff, corporate overhead cost,
collaboration with external partners, tagging labor
costs, communication costs
Training Initial training, certication On-going training and change management
Services Initial consulting, implementation services On-going third-party services, professional services

The optimal order quantity, Qn, and the optimal total cost (TC) 3.1. RFID investment in the ordering efciency
of the EOQ model are given by
Ordering efciency is dened as the degree to which the xed
r
2OD order cost per order cycle is reduced by the investment, K. In this
Q 1 section, we assume that the ordering efciency, R, is an
H
exponential function with a base e where the RFID investment
cost, K, improves the ordering efciency. Billington (1987)
D Q  p
TC  O  H 2HOD 2 suggested a similar exponential function with base e to determine
Q 2 the optimal investment cost for the reduction of setup costs in the
The rst term, OD=Q  , represents the total order cost during a classic EOQ model. As RFID technology improves the ordering
planning period (i.e., the xed order cost per order cycle times the efciency, but incurs the RFID investment cost, the following cost
number of orders during a planning period). The second term, minimization model is suggested.
HQ  =2, represents the total inventory holding cost during a RD Q
planning period (i.e., the annual inventory cost per unit times Min TC O IH JCD K 6
Q 2
the average inventory level). Eq. (1) shows that a higher xed
order cost results in a larger optimal order quantity, and a Mathematically, the ordering efciency function is dened as
higher inventory holding cost results in a smaller optimal order follows:
quantity. For the derivation of the optimal solution, refer to Roach R N MNebK , 0 r N rM r1 and 0 rR r1 7
(2005).
The Supply Chain RFID Investment Evaluation Model extends where M is the lowest ordering efciency achieved when there
the EOQ model by incorporating the ordering efciency of R, JIT is no investment in RFID technology and N is the highest
efciency of I, operating efciency of J, and investments of K, V, ordering efciency achievable by the investment of K. Note that
and X for these factors. Our model is based on a number of a lower value of the ordering efciency equates to a higher
assumptions. It is assumed that the initiation of each periodic efciency.
order cycle incurs a certain xed order cost. The proposed model The rst derivative of Eq. (6) is taken with regard to K and set
also assumes that the total demand level is known and constant. to zero, and solved. The results are given by
The annual consumption/production rate and related inventory @TC R0 OD
holding costs can be estimated in advance and reected in the 1 8
@K Q
annual purchase plan. The mathematical formula for our model is
given by @R Q
 9
RD Q @K OD
TC O IH JCD K V X 3 The rst derivative of Eq. (7) is taken with regard to K. The
Q 2
result is given by
r
2ORD
Q 4 @R
bMNebK bRN o 0 10
HI @K
where Setting Eq. (9) equal to Eq. (10) and substituting Eq. (4) for Q in
  Eq. (11) yield Eq. (12). Then, by solving Eq. (12), we derive the
dc c
I 1 ; 0rIr1 5 optimal ordering efciency, Rn, and the optimal order quantity, Qn,
d d
from Eqs. (14) and (16), respectively.
In this model, the total cost, TC, includes six cost components:
Q
ordering cost, inventory holding cost, operating cost, investment  bRN 11
OD
cost for ordering efciency (K), investment cost for JIT efciency (V),
and investment cost for operating efciency (X). Eq. (4) shows the r
2ORD
optimal order quantity which minimizes the total cost. Eq. (5) bRNOD 12
HI
indicates that JIT efciency (I) improves as the daily delivery rate (d)
approaches the daily consumption rate (c).
2ORD
In the following subsections, we examine: (1) investment RN2 13
in the ordering efciency, (2) investment in the JIT efciency,
b2 O2 D2 HI
(3) investment in the operating efciency, and (4) simultaneous p
RFID investment decisions. R s s2 N 2 14
 ARTICLE IN PRESS
318 I. Lee, B.-C. Lee / Int. J. Production Economics 125 (2010) 313323

where The rst derivative of Eq. (19) is taken with regard to V and set
1 to zero, and solved. The results are given by
s N 2
15
Hb ODI
@TC HI0 Q
1 21
Q @V 2
 bRN
OD @I 2
 22
Q  bR NOD 16 @V HQ
The rst derivative of Eq. (20) is taken with regard to V. The
Given the optimal ordering efciency, Rn, then the optimal
result is given by
investment, Kn, is derived from
lnR N=MN @I
lULelV lIL o 0
K 17 @V
23
b
Setting Eq. (22) equal to Eq. (23) and substituting Eq. (4) for Q
in Eq. (24) yield Eq. (25). Then, by solving Eq. (25), we derive the
3.1.1. The minimum demand level for RFID investment in the
optimal JIT efciency, In, and the optimal order quantity, Qn, from
ordering efciency
Eqs. (27) and (30), respectively.
To identify the minimum demand level for the optimal
investment during a planning period, Eq. (14) is set less than or 2
 lIL 24
equal to M and solved, resulting in Eq. (18). Note that the HQ
minimum demand level can be derived from Eq. (18) without the r
2
optimal solution. Therefore, 2M=MN2 Hb OI can serve as a 2 2ORD
25
threshold value for the RFID investment. HlIL HI

2M 4HI
DZ 2
18 IL2 26
MN2 Hb OI 2
2H2 l ORD
p
I w w2 L2 27
3.2. RFID investment in the JIT efciency
where
JIT efciency is dened as the degree to which the time gap 1
w L 28
between the point of delivery and the time of the consumption/ 2
Hl ORD
production is reduced by the investment, V. Mathematically, the JIT
efciency is calculated by: I 1c=d; 0 r I r1 where d is the daily 2
 lIL 29
delivery rate and c is the daily consumption rate. The improvement of HQ
the JIT efciency decreases the inventory management costs by
2
narrowing the time gap between the point of delivery and the time of Q 30
HlI L
the consumption/production. The decreasing time gap is attributable
to the fact that among others, RFID enhances the accuracy of the Given the optimal JIT efciency, In, then the optimal invest-
inventory information, resulting in a better control of shrinkage, ment, Vn, is derived from the following equation:
misplacement of products, and automated ow of materials. RFID is lnI L=UL
V 31
not only a data collection technology, but also a technology to help l
businesses further streamline their production ow. While the
inventory holding cost is related to rent for the required space, labor 3.2.1. The minimum demand level for RFID investment
to operate the space, interest on money invested in the inventory and in the JIT efciency
space, and other direct/indirect expenses, the JIT efciency is a To identify the minimum demand level during a planning period
technology-enabled improvement. Improving the JIT efciency is for the optimal investment in the JIT efciency, Eq. (27) is set less
achieved by the investment in a particular RFID technology. than or equal to U and solved, resulting in the following equation:
Several characteristics of RFID technology make the improve- 2U
ment of the JIT efciency possible. RFID has been instrumental in DZ 2
32
UL2 Hl OR
generating a constant ow of delivery information around-the-
clock. RFID can also help transport items more efciently by
cross-docking, tracking, and just-in-time delivery. Let V represent 3.3. RFID investment in the operating efciency
the investment in the reduction of the JIT efciency. The cost
minimization model is dened as Operating efciency is dened as the degree to which the
RD Q operating cost per unit is reduced by the investment, X. Several
Min TC O IH JCD V 19 characteristics of RFID technology make the reduction of operat-
Q 2
ing/maintenance cost of each item possible. Reducing inaccurate
An exponential investment function for the reduction of the inventory counts, preventing misplacement of goods, identifying
JIT efciency, I, is dened as defective items, and monitoring the condition of stored goods are
I L ULelV , 0 rL rU r 1 and 0 r V r1 20 among the benets from the operating efciency. For example,
holding conditions for certain goods are automatically monitored
When there is no RFID investment in the JIT efciency, the
and alerted to warehouse managers when the conditions are not
lowest efciency, U, is incurred. L is the highest efciency
met, thereby minimizing the spoilage costs. As RFID technology
possible. When I is equal to 1, all ordered goods are assumed to
improves the operating efciency, but incurs the RFID investment
be delivered at the beginning of each order cycle. When I is equal
cost, the following cost minimization model is suggested.
to 0, zero inventory costs are incurred (i.e., just-in-time
inventory). I of 0 implies that all ordered goods are consumed RD Q
Min TC O IH JCD X 33
immediately as soon as the delivery is made. Q 2
 ARTICLE IN PRESS
I. Lee, B.-C. Lee / Int. J. Production Economics 125 (2010) 313323 319

Let us assume that the operating efciency, J, is an exponential cost at the same time. Since we consider the ordering efciency,
function with base e. JIT efciency, and operating efciency for the RFID investment
decisions, the investment costs, K, V, and X are incorporated in
J E AEewX ; 0 rE rA r 1 and 0 r J r 1 34
RD Q
where A is the lowest operating efciency achieved when there is Min TC O IH JCD K V X 41
Q 2
no investment in RFID technology and E is the highest operating
efciency achievable by the investment, X. If the rst derivative of Since lIL=bRN I=R, by setting I 2 lHQL=lHQ and
TC is taken with regard to the investment, X and set to zero, and R Q bODN=bOD we can derive Eq. (42) to obtain the optimal
solved, then the results are order quantity, Qn.
r
@TC 2ODN
Q  f f
2
J0 CD 1 35 42
@X HL
where
@J 1
 36
@X CD bl
f 43
The rst derivative of Eq. (34) is taken with regard to X. The lbHL
n n n n
result is given by Given the optimal order quantity, Q , we obtain R , I , K and
@J Vn as follows:
wAEewX wJE o 0 37
@X Q  bODN
R 44
Setting Eq. (36) equal to Eq. (37), we derive the optimal bOD
operating efciency, Jn, from the following equation:
2 lHQ  L
1 I 45
J E 38 lHQ 
CDw
Given the optimal operating efciency, Jn, then the optimal lnR N=MN
K 46
investment, Xn, is derived from the following equation: b
ln1=CDwAE lnI L=UL
X 39 V 47
w l

3.3.1. The minimum demand level for RFID investment in the

4. Analysis of RFID investment with an illustrative scenario
operating efciency
To identify the minimum demand level during a planning
period for the optimal investment, Eq. (38) is set less than or equal This section examines the performance of different investment
to A and solved, resulting in Eq. (40). If the demand level is greater strategies discussed above and conducts sensitivity analyses to
than or equal to 1=C wAE, there is an optimal investment level. understand model behaviors of the investment decisions by
changing parameter values. The base parameter values assumed
1 are presented below.
DZ 40
C wAE Base parameters

O xed order cost of $10,000 per order cycle

3.4. Simultaneous RFID investment decisions
To improve the RFID investment productivity further, we
develop mathematical procedures to solve investment decisions
for the optimal ordering efciency and the JIT efciency simulta-
neously. The simultaneous RFID investment decisions refer to the
investment considerations in which both the ordering efciency
and the JIT efciency variables are solved at the same time in the
hope of saving investment costs further. On the other hand, the
previous three investment decisions are sequential in that only one
decision variable is solved at a time. Note that the operating
efciency does not need the simultaneous investment decisions.
In the sequential RFID investments, the three investment
decisions are made independent of each other. Simultaneous RFID
investments are made by considering the interdependence of the
three decisions. The simultaneous investment decisions refer to
the investment considerations in which both the ordering
efciency and the JIT efciency decision variables are solved at
the same time in the hope of saving investment costs further. The
rationale for the simultaneous investments is the consideration of
the interaction effect between the ordering cost and the inventory
holding cost. The sequential investment does not consider the
interaction effects and may result in the overinvestment in each
efciency category. The simultaneous investment decision will
lead to an optimal investment, considering the interaction effects
between the order cost and the inventory cost. Billington (2003)
showed the benets of reducing both the holding cost and setup
H annual inventory holding cost of $1000 per unit
D annual demand of 120,000 units
C operating cost of $10 per unit
M 1.0
N 0.3
U 1.0
L 0.2
A 1.0
E 0.5
l 0.00001
b 0.00002
w 0.00002
Using Eq. (18), the minimum demand level required for the RFID
investment in the ordering efciency is given at 1021. At the demand
level of less than 1021, no optimal investment can be found. As can
be seen from Fig. 1, both no investment and optimal investment
incur the same total cost at the demand level of 1021. As the demand
level increases, the benets of investing in ordering efciency
increase. Fig. 2 shows that the ordering efciency improves rapidly
near the minimum demand level, and the rate of improvement slows
down as the demand level increases. Our analysis indicates that an
organization with a large demand level (e.g., Wal-Mart) can achieve
a greater cost advantage from RFID technology than an organization
with a small demand, since a marginal increase in investment
provides large savings in the total cost.
 ARTICLE IN PRESS
320 I. Lee, B.-C. Lee / Int. J. Production Economics 125 (2010) 313323

Fig. 1. Comparison of total cost between no investment and investment in ordering efciency.

Fig. 2. The relationship between optimal ordering efciency and the demand level.

Table 3
Performance of simultaneous RFID investment.

No. RFID investments (A) Sequential RFID Simultaneous RFID Improvement (A  C) Improvement (B  C)
investment (B) investment (C)

TCn $2,749,193 $1,633,831 $1,612,151 $1,137,042 $21,680

Rn 1 0.3375 0.3693 0.6307  0.0318
In 1 0.2667 0.3202 0.6798  0.0535
Jn 1 0.5417 0.5417 0.4583 0.0000
Kn 0 $146,337 $115,615  $115,615 $30,722
Vn 0 $248,491 $189,538  $189,538 $58,953
Xn 0 $124,245 $124,245  $124,245 0
Kn + V n + X n 0 $519,073 $429,398  $429,398 $89,675

The analysis of the JIT efciency also shows a similar pattern to
the previous analysis in the total cost reduction. A minimum
demand level of 3125 for the investment in the JIT efciency is
derived from Eq. (32). At the demand level of less than 3125,
no feasible solution for investment can be found. Eq. (4),
p investment become greater than those of the sequential RFID
Q  2ORD=HI, suggests that as the ordering efciency of
R improves, the optimal order quantity decreases, and as the
JIT efciency of I improves, the optimal order quantity increases.
Table 3 presents the improvement made by the simultaneous
RFID investment decisions over the sequential RFID investment
decisions at the demand level of 120,000. In the sequential RFID
investment decisions, the two investment decisions are made
independently. While the sequential RFID investment decisions
for the ordering and JIT efciencies achieve greater efciencies
than the simultaneous RFID investment decisions, they result in
overinvestment and the larger total cost. Fig. 3 shows that as the
demand level increases, the cost savings of the simultaneous RFID
investment.
Further scenario-based analysis was conducted by changing
parameter values. Figs. 4 and 5 show the impact of different values
of the xed order cost and the inventory cost on the benets,
respectively. The results show that the order cost and the inventory
cost are highly related with the benets of RFID. While the RFID
investment increases marginally, the higher the order cost and the
inventory cost are, the greater the benets of RFID are.
 ARTICLE IN PRESS
I. Lee, B.-C. Lee / Int. J. Production Economics 125 (2010) 313323 321

Fig. 3. Cost saving by simultaneous RFID investment over sequential RFID investment.

Fig. 4. Change of xed order cost per cycle and benets.

Fig. 5. Change of inventory cost per unit and benets.

 ARTICLE IN PRESS
322 I. Lee, B.-C. Lee / Int. J. Production Economics 125 (2010) 313323
5. Conclusions
Advances in RFID technology hold great promise for lowering
transaction costs and speeding up order fulllment processes.
However, despite the popularity of RFID technology, no signicant
statistics are available on the ROI of various RFID technologies and
effectiveness of management practices because of the limited
history with RFID. The growing RFID adoption in the industry
raises an important question for many organizations on the
optimal/sound investment level. For example, an organization
may need to decide the most cost-effective technology among a
number of alternative technology choices ranging from pallet
level tagging to item level tagging.
Many risks may lie ahead in the management of RFID
technologies, as we have already observed signs of overinvest-
ment in RFID infrastructure. In 2003, Wal-Mart announced that by
January, 2005 its top 100 suppliers will be required to implement
RFID at the pallet and case level for all of their products, thus
streamlining the supply chain processes. Since then, only about
600 of Wal-Marts over 60,000 nationwide suppliers have engaged
in the project. Despite support from major suppliers such as
Procter & Gamble, Kimberly-Clark, and Unilever, Wal-Mart is
reshaping its RFID strategy due to unexpected organizational and
technical challenges. Wal-Marts abrupt change of plan demon-
strates that in time of this early stage of technology diffusion,
IT managers cannot emphasize enough the importance of the
solid justication of the RFID investment.
To complement the body of studies that are mostly descriptive
in nature, we presented the Supply Chain RFID Investment
Evaluation Model. This model considers RFID investment oppor-
tunities to improve the ordering efciency, JIT efciency, and
operating efciency, and derives optimal investment levels for
these efciencies. The model gives managers insights into why
individual companies should make different investment decisions
on RFID technology. While we used an exponential function with
a base e as a form of investment functions, other functional forms
can be easily applied to the model and optimal investment
decisions can be readily made with the help of computer software
such as spreadsheet software.
Without the widespread RFID adoption and further techno-
logical breakthrough, the cost of RFID tags, readers, and software
remains a barrier. Our analysis suggests that in general, a higher
demand level will result in a larger optimal investment but with
larger cost savings. For example, companies with a growth
strategy are likely to enjoy greater investment benets. An
investment cost function becomes similar among companies
due to standardization of RFID technologies. However, individual
companies demand level and inventory cost structure are likely
to create different investment opportunities for each company.
Large suppliers of Wal-Mart such as Johnson & Johnson, Kimberly-
Clark, Procter & Gamble, and Unilever are likely to enjoy the
economy of scale RFID cost advantage. On the other hand, many
small and medium-sized suppliers claim RFID is cost-ineffective
due to their low demand level and high up-front implementation
cost. Our model can help large retailers set appropriate RFID
mandates to their suppliers. For the small and medium-sized
suppliers to invest in RFID, retailers may need to consider sharing
technology resources and providing certain incentives to com-
pensate for the suppliers cost disadvantage.
RFID investment decisions can be supplemented with the use
of AHP. For example, AHP can be used to incorporate qualitative
decision criteria on top of the proposed decision model. While we
showed the cost advantage of the simultaneous investment,
additional criteria may be used to compare the simultaneous
investment and sequential investment. Delphi method is very
useful to estimate the parameter values. The typical Delphi
method requires the experts to answer questionnaires in two or
more rounds. After each round, a facilitator provides an
anonymous summary of the experts parameter estimates from
the previous round as well as the reasons for their judgments.
Then, experts are asked again to revise their earlier estimates in
light of the estimates of other members in the group. During this
repetitive process, the range of the parameter values will decrease
and the group will converge towards the best estimate. The black
box approach can be used when it is difcult to estimate
parameter values. For example, one may use a variety of RFID
technology options on a small trial basis and see how much
improvement/saving can be obtained. The black-box approach
will facilitate the understanding of the impact of the RFID
investment and provide estimates of parameter values from the
trial-runs of the technology. While this approach is less
sophisticated than a full-scale analysis, it is a fast solution and
can be used in conjunction with the Delphi method and AHP.
Accounting practices such as Activity-Based Cost Accounting can
help identify the sources of cost in great detail. Many organiza-
tions have already utilized data warehousing and sales database
to analyze the historical demand patterns and to forecast the
future demand during the planning period.
To the best of our knowledge, our study is the rst effort in
developing an analytical normative Supply Chain RFID Investment
Evaluation Model and analyzing the impact of RFID technologies
on the cost savings. While our model focuses on the business
organizations supply chain RFID technology, the model can be
easily expanded to the investment decision-makings of other
areas such as hospitals, governments, and libraries that have
similar cost structures and investment functions.
RFID valuation research needs to deepen our understanding of
the relationships between RFID technology and value creations in
many levels of organizations. Otherwise, the valuation of RFID
will continue to be elusive and the investment will be based on
gut feelings rather than a rational decision. The Supply Chain RFID
Investment Evaluation Model provides a solid foundation to
assess RFID business value and optimal investment in RFID,
moving beyond the descriptive RFID valuation studies to value
maximizing prescriptive studies, the outcomes of which should be
able to guide our RFID professionals to plan on what RFID we need
to invest; how much we need to invest; when we need to invest;
and how we can enhance the values.
References
ABI Research, 2009. Retrieved on April 2, 2009. /http://www.abiresearch.com/
press/1395-Total + RFID+ Revenue +to + Exceed +$5.6 + Billion+ in+ 2009S.
Angeles, R., 2007. An empirical study of the anticipated consumer response to RFID
product item tagging. Industrial Management and Data System 107 (4),
461483.
Bardhan, I., Bagchi, S., Sougstad, R., 2004. Prioritizing a portfolio of information
technology investment projects. Journal of Management Information Systems
21 (2), 3360.
Bendavid, Y., Wamba, S.F., Lefebvre, L.A., 2006. Proof of concept of an RFID-enabled
supply chain in a B2B e-commerce environment. In: Proceedings of the
Eighth International Conference on Electronic Commerce, Fredericton, New
Brunswick, Canada, pp. 564568.
Billington, P.J., 1987. The classic economic production quantity model with setup
cost as a function of capital expenditure. Decision Sciences 18, 2542.
Billington, P.J., 2003. Holding cost reduction in the EOQ model. Journal of the
American Academy of Business 3 (1), 409415.
Bose, I., Lam, C.Y., 2008. Facing the challenges of RFID data management.
International Journal of Information Systems and Supply Chain Management
1 (4), 119.
+
Bose, F., Piotrowski, J., Scholz-Reiter, B., 2009. Autonomously controlled storage
management in vehicle logisticsapplications of RFID and mobile computing
systems. International Journal of RF Technologies: Research and Applications
1 (1), 5776.
Bottani, E., 2008. Reengineering, simulation and data analysis of an RFID system.
The Journal of Theoretical and Applied Electronic Commerce Research 3 (1),
1328.
 ARTICLE IN PRESS
I. Lee, B.-C. Lee / Int. J. Production Economics 125 (2010) 313323
Bottani, E., Rizzi, A., 2008. Economical assessment of the impact of RFID technology
and EPC system on the fast moving consumer goods supply chain. Interna-
tional Journal of Production Economics 112 (2), 548569.
Chabrow, E., 2003. IT staffs lack nancial chops for project analysis. Information-
Week 932, 20.
Clemons, E.K., 1991. Evaluation of strategic investments in information technol-
ogy. Communications of the ACM 34 (1), 2236.
Dixit, A.K., Pindyck, R.S., 1995. The options approach to capital investment.
Harvard Business Review, 105115.
Doerr, K.H., Gates, W.R., Mutty, J.E., 2006. A hybrid approach to the valuation of
RFID/MEMS technology applied to ordnance inventory. International Journal of
Production Economics 103 (2), 726741.
Dos Santos, B.L., 1991. Justifying investments in new information technologies.
Journal of Management Information Systems 7 (4), 7190.
Dutta, A., Lee, H.L., Whang, S., 2007. RFID and operations management: technology,
value, and incentives. Production and Operations Management 16 (5), 646655.
Goh, C.H., 1997. Analytic hierarchy process for robot selection. Journal of
Manufacturing Systems 16 (5), 381396.
Groenveld, P., 1997. Roadmapping integrates business and technology. Research
Technology Management 40 (5), 4855.
Hardgrave, B.C., Aloysius, J., Goyal, S., 2009. Does RFID improve inventory
accuracy? A preliminary analysis. International Journal of RF Technologies:
Research and Applications 1 (1), 4456.
Jeffery, M., Leliveld, I., 2004. Best practices in IT portfolio management. MIT Sloan
Management Review 45 (3), 4149.
Jones, P., Clarke-Hill, C., Shears, P., Comfort, D., Hillier, D., 2004. Radio frequency
identication in the UK: opportunities and challenges. International Journal of
Retail and Distribution Management 32 (3), 164171.
Kaplan, R., Norton, D., 1992. The balanced scorecard: measures that drive
performance. Harvard Business Review, 7179.
de Kok, A.G., van Donselaar, K.H., van Woensel, T., 2008. A break-even analysis of
RFID technology for inventory sensitive to shrinkage. International Journal of
Production Economics 112 (2), 521531.
Krause, D.R., Handeld, R.B., Tyler, B.B., 2007. The relationships between supplier
development, commitment, social capital accumulation and performance
improvement. Journal of Operations Management 25 (2), 528545.
Kumar, R.L., 2004. A framework for assessing the business value of information
technology infrastructures. Journal of Management Information Systems 21
(2), 1132.
Kumar, S., Budin, E.M., 2006. Prevention and management of product recalls in the
processed food industry: a case study based on an exporters perspective.
Technovation 26 (5/6), 739750.
Lee, H., Ozer, O., 2007. Unlocking the value of RFID. Production and Operations
Management 16 (1), 4064.
Lee, I., 2004. Evaluating business-process integrated information technology
investment. Business Process Management Journal 10 (2), 214233.
Lin, K., Lin, C., 2007. Evaluating the decision to adopt RFID systems using analytic
hierarchy process. The Journal of the American Academy of Business,
Cambridge 11 (1), 7278.
Luftman, J., Muller, H., 2005. Total value of ownership: a mew model. Optimize 4
(7), 5154.
Michael, K., McCathie, L., 2005. The pros and cons of RFID in supply chain
management. In: Proceedings of the International Conference on Mobile
Business, pp. 623629.
Miles, R.E., Snow, C.C., 2007. Organization theory and supply chain management:
an evolving research perspective. Journal of Operations Management 25 (2),
459463.
Min, S., Mentzer, J.T., 2004. Developing and measuring supply chain management
concepts. Journal of Business Logistics 25 (1), 6399.
Morton, S.C., Dainty, A.R.J., Burns, N.D., Brookes, N.J., Backhouse, C.J., 2006. Managing
relationships to improve performance: a case study in the global aerospace
industry. International Journal of Production Research 44 (16), 32273241.
Ngai, E.W.T., Cheng, T.C.E., Au, S., Lai, K.-H., 2007. Mobile commerce integrated with
RFID technology in a container depot. Decision Support Systems 43 (1), 6276.
323
Ngai, E.W.T., Moon, K.K.L., Riggins, F.J., Yi, C.Y., 2008. RFID research: an academic
literature review (19952005) and future research directions. International
Journal of Production Economics 112 (2), 510520.
Ozelkan, E.C., Galambosi, A., 2008. When does RFID make business sense for
managing supply chains? International Journal of Information Systems and
Supply Chain Management 1 (1), 1547.
Patil, M., 2004. Investment in RFID: a real options approach. A Patni White Paper,
Patni Computer Systems.
Patnayakuni, R., Rai, A., Seth, N., 2006. Relational antecedents of information ow
integration for supply chain coordination. Journal of Management Information
Systems 23 (1), 1349.
Peacock, E., Tanniru, M., 2005. Activity-based justication of IT investments.
Information and Management 42 (3), 415424.
Rekik, Y., Sahin, E., Dallery, Y., 2008. Analysis of the impact of the RFID technology
on reducing product misplacement errors at retail stores. International Journal
of Production Economics 112 (1), 264278.
Reyes, P.M., Jaska, P., 2007. Is RFID right for your organization or application?
Management Research News 30 (8), 570580.
RFID Wizards Inc., 2009. Return on Investment Study for RFID Solution. Retrieved
on April 2, 2009. /http://www.buyrd.com/rdwizards/roi_study_v1.pdfS.
RNCOS Group, 2007. Global RFID Market Analysis till 2010. Research Report #
RNC1140.
Roach, B., 2005. Origin of the economic order quantity formula; transcription or
transformation? Management Decision 43 (9), 12621268.
Ross, J.W., Breath, C.M., 2002. Beyond the business case: new approaches to
IT investment. MIT Sloan Management Review 43 (2), 5159.
Sethi, V., Hwang, K.T., Pegels, C., 1993. Information technology and organiza-
tional performance: a critical evaluation of computerworlds index of
information systems effectiveness. Information and Management 25 (4),
193205.
Soon, C.-B., Gutierrez, J.A., 2008. Effects of the RFID mandate on supply chain
management. The Journal of Theoretical and Applied Electronic Commerce
Research 3 (1), 8191.
Tiernan, C., Peppard, J., 2004. Information technology: of value or a vulture?
European Management Journal 22 (6), 609623.
Twist, D.C., 2005. The impact of radio frequency identication on supply chain
facilities. Journal of Facilities Management 3 (3), 226239.
Tzeng, S.-F., Chen, W.-H., Pai, F.-Y., 2008. Evaluating the business value of RFID:
evidence from ve case studies. International Journal of Production Economics
112 (2), 601613.
Uckelmann, D., Tilo Hamann, T., Zschintzsch, M., 2009. Performance increase and
benet compensation in supply chains by partial information sharing and
billing based on identication of returnable transport items. International
Journal of RF Technologies: Research and Applications 1 (1), 2343.
Ustundag, A., Tanyas, M., 2009. The impacts of radio frequency identication
(RFID) technology on supply chain costs. Transportation Research Part E:
Logistics and Transportation Review 45 (1), 2938.
Veeramani, D., Tang, J., Alfonso Gutierrez, A., 2008. A framework for assessing the
value of RFID implementation by tier-one suppliers to major retailers. The
Journal of Theoretical and Applied Electronic Commerce Research 3 (1),
5570.
Vijayaraman, B.S., Osyk, B.A., 2006. An empirical study of RFID implementation in
the warehousing industry. The International Journal of Logistics Management
17 (1), 620.
Wamba, S.F., Lefebvre, L.A., Bendavid, Y., Lefebvre, El., 2008. Exploring the impact
of RFID technology and the EPC network on mobile B2B eCommerce: a case
study in the retail industry. International Journal of Production Economics
112 (2), 614629.
Wang, S., Liu, S., Wang, W., 2007. The simulated impact of RFID-enabled supply
chain on pull-based inventory replenishment in TFT-LCD industry. Interna-
tional Journal of Production Economics 112 (2), 570586.
Zhu, K., Weyant, J.P., 2003. Strategic decisions of new technology adoption under
asymmetric information: a game-theoretic model. Decision Sciences 34 (4),
643675.