Document Type

Closed Project

Publication Date

Spring 2005


Nathasit Gerdi

Course Title

Decision Making

Course Number

ETM 530


The use of radio frequency identification (RFID) is an established technology that is finding a new use within supply chain management. An RFID tag can transmit its information via radio waves when queried by a tag reader. When assembled onto a product, case, pallet, or container, this information can provide visibility to a company’s inventory system. This visibility can be extended throughout a company’s supply chain to provide benefits such as labor efficiencies, error reduction, labor savings, accurate asset tracking, and proactive stock management. In 2001, Gap Inc. launched an RFID pilot in one store in Atlanta resulting in increased data accuracy as well as a 15% increase in sales. Based on that success, management may already be positioning RFID into a corporate wide initiative. This paper examines the various alternatives to extending the use of RFID throughout The Gap’s business units and supply chain. Some early adopters of the technology are reaping the benefits of operational savings, reduced shrinkage, and increased sales. The decision model looked at a payoff matrix based on RFID implementation in a variety of the corporate business units (Gap, Old Navy, and Banana Republic). A comparison was also made on the predicted states of RFID per-tag costs over a three-year horizon. As part of the analysis, some risk variables were assigned due to the current volatility of tag technology, tag pricing, and overall economic factors. In the end, the recommendation based on the decision model was the implementation of RFID for the two business units GAP and Old Navy with a ‘slap & ship’ principle – meaning that just boxes are tagged when they enter GAP Inc.’s supply chain.


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