Prof. Dr. Majid Hashemipour Mohammad Hashem Davoodi Semiromi Pooya Haghani MENG584 - Advanced Manufacturing Process Subject: 3.IMPLEMENTATION OF RFID TECHNOLOGY FOR IMPROVING INVENTORY CONTROL (Advisor: Vahid Bagherpour)

Radio Frequency Identification (RFID) Introduction: Radio Frequency Identification (RFID) continues to evolve as a major technology for tracking goods and assets around the world. RFID uses radio waves to identify 'things' automatically and in real time. For the supply chain and operations it provides increased levels of product and asset visibility. For example, it can help hospitals track and locate expensive equipment more quickly to improve patient care. Retailers are looking at using the technology to automatically receive shipments, and have greater visibility into the merchandize in the back rooms and on the store shelves. The United States Food and Drug Administration (FDA) see RFID as a compelling technology to prevent the introduction of counterfeit drugs and biologics into the U.S. drug distribution chain.

Radio Frequency Identification Technology: RFID has a long history Radio Frequency Identification Technology: RFID has a long history. It is only now becoming a major force in the industry, with associated standards-bodies and technology advancements. RFID technology was used as far back as World War II to differentiate between friendly and enemy aircraft. Over the years this technology has evolved and been applied to animal tracking and identification, speed pass lanes on toll roads, building security access, and for electronic payment processing at gas stations.

Enchasing The Supply Chain With RFID. RFID has captured the attention of many leading companies today who are making significant investments of money and time to make this technology feasible in their operations. Thousands of inbound and outbound shipments can be identified with RFID smart labels that enable unattended identification, verification and sortation at different points in the supply chain across trading partners and distribution centers.

Supply Chain: 1-Tracing Operational Improvements with RFID 1-In the Manufacturing plant, pallets arrive at the dock door where stationery readers pick up EPC numbers and other data about the shipment. 2-Received goods are checked against the Shipping Manifest and will go to one of three areas—Inventory, Production or Returns.

3-A new shipping smart label is created to ship Returns back to suppliers. 4-Inventory cases are read by a forklift reader that updates the system with product and location data where they will be stored in the Warehouse. 5-Production components are read at the case level, updating the system that these goods will be used immediately. Individual components needed to assemble new products are collected into bins at the start of the Production Line, allowing the manufacturer to link EPC data of raw materials with the finished products. A smart label is generated to identify the bin and its contents. 6-As the bins move toward the work-in-process line, they are read into the system by stationary conveyor-belt readers. 7-As workers assemble components into products, a smart label is attached to the product at the outset of Work In Process. Strategically positioned reader/encoders write data about each task that is completed to the read/write tag in the smart label. 8-At Quality Control, a reader picks up EPC numbers of products that have passed inspection. EPC numbers and product data are recorded in the manufacturer’s database, providing QC documentation as goods move through the supply chain. 9- Finished goods go to Packaging and a smart label is created that contains specific new product data.

10- A fork-lift reader is used to update the system with information about the location where finished goods are stored. 11-Inventory is also stored in the warehouse. As cases are removed from shelves and used in manufacturing, a hand-held reader or forklift reader can be used to update the system. 12- In the Warehouse, finished goods destined for a particular Distribution Center are collected into pallets. 13-As pallets leave the dock door, stationary readers at Dispatch take take a final reading of the goods and update the system that they have been loaded on to a truck for shipping out. 14-Advance Shipping Manifests give Distribution Centers data about pallets of good that will arrive. Pallets are read by stationary readers that record the shipment and flag duplicate, unordered or suspect items. 15-Forklift readers/encoders update the system with the location of goods that are being stored. At any time, sensors can record conditions in the DC and add data to the smart label, allowing products to carry their own pedigree or history.

15-Forklift readers/encoders update the system with the location of goods that are being stored. At any time, sensors can record conditions in the DC and add data to the smart label , allowing products to carry their own pedigree or history. 16-At the DC, goods from multiple suppliers are collected on pallets and targeted for a particular Retail destination. Pallets are shrink-wrapped to protect contents and keep them stable. 17-Stationary readers at the dock doors update the system to reflect what types of goods have been received, from whom and when. Again, goods that are accepted will be stored in the Backroom or placed directly onto shelves in-store. 18-Stationary readers or forklift readers update the system as goods transition from the backroom into the Retail Store. 19-Shelf readers report back into the system when items are low and shelves need restocking. 20-EPC numbers become inactive at the end of the supply chain when containers are recycled in Compacting, unless assets, such as pallets or cartons, will be reused.

Short range RFID system Short range RFID system works at a range of up to 60 cm and monitors separated single products on convey or belt by hand scanning.

Medium range RFID system These systems have a range up to 3.5 m. Used with sensors around warehouse door.

Long range RFID system Large numbers of packages can be managed. Wide area can be covered. Range from 50 – 100 m.

Very long range RFID system Range up to 1000m. Covered large area High accuracy.

Benefits: Reduction of misplaced productions Improve labor productions Time saving in inventory control Eliminated paper work and data entry Reduce search time

Usage of RFID in inventory control: In this article shows how helpful is Radio frequency identify in inventory control. In today’s business a close cooperation is necessary to decrease the joint total inventory cost. According to Simchi-Leviet al. several international companies have demonstrated that integrating the inventory control has improved the company’s performance and market share. A simple method to compute economic order quantities (EOQ): The economic order quantity (EOQ) is one of the most popular and successful optimization models in inventory control management, due to its simplicity of use, simplicity of concept, and robustness. The most popular approach to derive the EOQ formulation in operations management textbooks is to apply differential calculus betaking the first- and second-order derivatives of the average cost per unit. EOQ, or Economic Order Quantity, is defined as the optimal quantity of orders that minimizes total variable costs required to order and hold inventory.

How EOQ Works Total Cost = Purchase Cost + Order Cost + Holding Cost The Total Cost Formula Total Cost = Purchase Cost + Order Cost + Holding Cost

How EOQ Works The Total Cost Formula P = Purchase cost per unit R = Forecasted monthly usage

How EOQ Works The Total Cost Formula P = Purchase cost per unit R = Forecasted monthly usage C = Cost per order event (not per unit) Q = The number of units ordered

How EOQ Works The Total Cost Formula P = Purchase cost per unit R = Forecasted monthly usage C = Cost per order event (not per unit) Q = The number of units ordered F = Holding cost factor

How EOQ Works The EOQ Formula Total Cost Formula Taking the derivative of both sides of the equation and setting equal to zero to find the minimum value of the function, one obtains:

How EOQ Works The EOQ Formula The result of differentiation The Economic Order Quantity Here is the a graphic representation of the EOQ equation.

How we can use RFID technology in EOQ model? As you see for use economic order quantities, we should know the demand rate per unit of time in other hand we should know how many units are left in inventory and then we can calculate the total relevant cost per unit of time. If we use human resource it will take a lot of time and budget Whereas With RFID solution, inventory can be updated in real time without product movement, scanning or human involvement.

References: Radio Frequency Identification: An Introduction for Library Professionals. Alan Butters. Australasian Public Libraries v19.n4(2006) pp.2164–174. RFID Poses No Problem for Patron Privacy." "American Libraries" v34 no11 (D 2003) pg.86. Martein Meints (2007), D3.7 A Structured Collection on Information and Literature on Technological and Usability Aspects of Radio Frequency Identification (RFID), FIDIS deliverable 3(7), June 2007.