Multi-echelon Supply Chain Model for Deteriorating Products in a Fuzzy Deterioration Environment

Abstract

Purpose: This research analyses the optimal inventory strategy for a deteriorating product with imprecise deterioration rate in a single supplier-buyer supply chain system with realistic factors. Design/methodology/approach: The integration of production and distribution inventory system is crucial in practice for minimizing a firm's cost while the effect of deterioration cannot be ignored as it affects the entire inventory system. Nowadays managers have begun to recognize that effectively managing deterioration risks in their business operations plays an important role in successfully managing their inventories. Here, the deterioration rate is treated as the triangular fuzzy number. Also we use the extension principle method to define the membership function of the fuzzy total cost and defuzzify by the centroid to find the estimate of the total cost in the fuzzy sense. Findings: A methodology has been proposed through mathematical model which involves designing an iterative algorithm to achieve optimal decisions such as order lot-size and total number of deliveries from the supplier to buyer. Originality value: The effects of varying the central parameter values on the optimal solution are performed by numerical and sensitivity analysis so as to highlight the differences between crisp and the fuzzy cases.