Abstract
Vendor managed inventory (VMI) is one of the well-known strategies of merchandizing between suppliers and retailers. The essential aspect in VMI model is to fulfill the demand of the retailers by the suppliers. Since, the costs of items are highly volatile, it is not possible to design a VMI model with deterministic demand. In this paper, we have considered one supplier and retailer to perform business of multi-product under VMI model with uncertain demand. Thus, it proposes a novel VMI model, termed as ‘interval type-2 fuzzy vendor managed inventory (IT2 FVMI) model’ that considers interval type-2 fuzzy number to represent the uncertain demand. The objective is to minimize the total cost of VMI by finding the optimum ordered quantity and backordered level. We develop a particle swarm optimization algorithm based solution approach to solve it. A suitable real-world application is considered to perform the simulation. We have considered different number of instances of the products to obtain the results. By comparing the results with the deterministic demand and type-1 fuzzy number, we show the efficacy of our proposed IT2 FVMI model.
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