An integrated approach of fuzzy AHP and fuzzy TOPSIS in modelling contractual design of supply chain inventory coordination mechanism

Abstract

In recent decades, firms are facing the challenges of lack of inventory coordination issues in multi echelon inventory coordination environment. Contractual design of supply chain inventory coordination mechanism (SCICM) are necessary for effective and efficient SCM and not merely better profit distribution within supply chain trading partners (SCTPs), but effective coordination mechanism is key necessity for complex supply flow network. SC structure consists of SV and MB, SC for a multi products flow network considered. SCTPs can be coordinated by better contractual design for perfect SCICM. These criteria are namely controllable lead time and asymmetric information; common replenishment epoch; inventory-level-dependent demand rate; VMI system with stock-out cost sharing; sales rebate contract and VMI. FAHP and FTOPSIS approaches can be used to integrate more consistent evaluation and prioritisation of SCTPs based on five SCICM criterion determined by factor analysis of survey data and expert opinion of retail industry. FAHP is used to calculate relative weight of each SCICM criteria and SCP is ranked based on closeness coefficient. Calculated for each partners are using FTOPSIS.