Fuzzy estimations and system dynamics for improving manufacturing orders in VMI supply chains

Abstract

In this chapter, we evaluate the behavior of fuzzy estimations of demand for releasing manufacturing orders in a Vendor-Managed Inventory (VMI) supply chain, which is based on a collaborative deal between retailer and manufacturer, and focuses on the interchange of information about demand and inventory levels. The supply chain considered consists of an end consumer, a retailer and a manufacturer. A system dynamics model with fuzzy estimations of demand has been constructed for supply chain simulation. Fuzzy numbers are used to model fuzzy estimations of demand. With a numerical example, we show that the bullwhip effect can be effectively reduced at the level where fuzzy orders exist and that the fill rate reached improves at the retailer level.© Springer-Verlag Berlin Heidelberg 2014.