Optimal radio frequency identification deployment in a supply chain network

In recent years, the use of radio frequency identification (RFID) within supply chain management has received considerable attention. A significant upfront investment together with uncertain return on investment, however, remain impediments to deployments of RFID systems. This paper proposes a novel approach to analyze the potential benefits of RFID systems. We suggest deployment strategies that determine an optimal location of RFID within a supply chain network. The resulting models can be used to evaluate the value of information with respect to item losses. In addition, we discuss methods for solving the resulting large-scale optimization problems, and analyze how various system characteristics impact optimal deployment strategies as well as the overall RFID benefits.