The Impact of ERP Integration and Preservation Technology on Profit Optimization in Inventory Systems with Shortages and Deterioration

Abstract

To determine and justify the significance of preservation technology in an ERP-integrated inventory system facing shortages and deterioration, with the goal of increasing profit while improving operational efficiency and decision-making accuracy. An enhanced inventory framework is formulated to account for shortages and product deterioration under Enterprise Resource Planning integration. This study develops an integrated inventory system and conducts a comparison analysis to determine the effectiveness of the system under four cases, namely: (i) An inventory system that accounts for shortages and deterioration, integrates preservation technology, and operates without ERP implementation (ii) An inventory system that accounts for shortages and deterioration without any investment (iii) An inventory system that considers shortages and deterioration with the integration of both preservation technology and Enterprise Resource Planning investment and (iv) An inventory system that considers shortages and deterioration with ERP integration but without the adoption of preservation technology. Secondary data obtained from Umakanta Mishra’s studies are utilized to substantiate the numerical analysis. A computational example is provided to illustrate the efficacy of the inventory system in the context of deterioration, revealing that the total profit for the Cases I, II, III and IV are $289349.379, $287534.457, $290064.795 and $288249.435respectively. The results indicate that integrating preservation technologies into an ERP-based inventory system that addresses shortages and deterioration markedly improves economic and operational performance. The integration of ERP and preservation strategies in an inventory system under shortage and deterioration situations has not yet been thoroughly examined in the existing literature.