A two-echelon inventory model with fuzzy annual demand in a supply chain

Abstract

It requires a new spirit of cooperation between the buyer and the vendor in supply chain environment today. A two-echelon inventory model with such consideration is based on the total cost optimization under a common stock strategy and business formula. However, the supposition of known annual demand in most related publications may not be realistic. This paper proposes the inclusion of fuzzy annual demand and then employs the signed distance, to find the estimation of the common total cost in the fuzzy sense, and derives the corresponding optimal buyer's quantity consequently and the integer number of lots in which the items are delivered from the vendor to the purchaser. Numerical exampleis included to illustrate the procedures of the solution.

Keywords:

• Supply chain
• inventory
• signed distance