A fuzzy echelon approach for inventory management in supply chains

Abstract

This paper presents a methodology to define a supply chain (SC) inventory management policy, which is based on the concept of echelon stock and fuzzy set theory. In particular, the echelon stock concept is adopted to manage the SC inventory in an integrated manner, whereas fuzzy set theory is used to properly model the uncertainty associated with both market demand and inventory costs (e.g. holding and backorder costs). The methodology is applied on a three stage SC so as to show the ease of implementation. Finally, by adopting simulation, the performance of the three stage SC is assessed and shown to be superior to that, which the adoption of a local inventory management policy would guarantee.