Universität zu Köln

Stangl, Tobias ORCID: 0000-0002-3222-9999 and Thonemann, Ulrich ORCID: 0000-0002-3507-9498 (2017). Equivalent Inventory Metrics: A Behavioral Perspective. M&SOM-Manuf. Serv. Oper. Manag., 19 (3). S. 472 - 489. CATONSVILLE: INFORMS. ISSN 1526-5498

Full text not available from this repository.

Abstract

We analyze how performance metrics that contain equivalent information affect actual decisions. We consider two such performance metrics from supply chain management, days of supply and inventory turn rate, where one is the inverse of the other. We argue that individuals' assessment of performance is also affected by the metric as opposed to solely based on the inventory value that actually matters. We perform three laboratory studies and analyze how decisions are affected by the metric used to indicate inventory performance. The first study considers alternative inventory optimizations, out of which one must be selected. The second study analyzes a decision maker who must decide on the effort to invest in optimizing inventory of a specific product. The third study corresponds to the economic order quantity model. Our behavioral models suggest that decisions are affected by the metric that is used to indicate performance, and we find support for the predictions in laboratory experiments with human subjects: Under the inventory turn rate metric, individuals overvalue inventory reductions. Compared to decisions under the days of supply metric, they choose worse inventory optimization options, invest more effort optimizing inventory of specific products, and choose higher ordering cost.

Item Type:	Journal Article
Creators:	Creators Email ORCID ORCID Put Code Stangl, Tobias UNSPECIFIED orcid.org/0000-0002-3222-9999 UNSPECIFIED Thonemann, Ulrich UNSPECIFIED orcid.org/0000-0002-3507-9498 UNSPECIFIED
URN:	urn:nbn:de:hbz:38-228306
DOI:	10.1287/msom.2017.0620
Journal or Publication Title:	M&SOM-Manuf. Serv. Oper. Manag.
Volume:	19
Number:	3
Page Range:	S. 472 - 489
Date:	2017
Publisher:	INFORMS
Place of Publication:	CATONSVILLE
ISSN:	1526-5498
Language:	English
Faculty:	Faculty of Management, Economy and Social Sciences
Divisions:	Center of Excellence C-SEB
Subjects:	Economics
Uncontrolled Keywords:	Keywords Language REAL EFFORT EXPERIMENT; COGNITIVE REFLECTION; DECISION-MAKING; INDIVIDUAL-DIFFERENCES; RISK COMMUNICATION; NEWSVENDOR PROBLEM; JUDGMENT; DISAPPOINTMENT; UNCERTAINTY; PERFORMANCE Multiple languages Management; Operations Research & Management Science Multiple languages
Refereed:	Yes
URI:	http://kups.ub.uni-koeln.de/id/eprint/22830