A cost-benefit analysis for applying RFID to pharmaceutical supply chain

Recently, the advantages of RFID make it the focus of supply chain research areas, so it is critical to do cost-benefit analysis on RFID investment. By assuming a simple scenario of RFID application on pharmaceutical supply chain and comparing the processes before and after RFID application, this paper analyzes RFID cost and benefit quantitatively, and offers the corresponding formula, finally proposes the PV is the initial of the underlying asset. The aim is to provide a solution to determinate the parameter of initial investment in Real Option model (Wu et al. 2009), which advised to evaluate RFID investment with Real Option.