Optimisation of the Single-Vendor Single-Buyer Supply Chain System under Fuzzy Demand Using Optimisation–Simulation Closed Loop Technique

Abstract

This research aims to model and optimise the most applicable supply chain system, which is a single-vendor single-buyer system with fuzzy buyer demand. An optimisation model of the supply chain system under consideration is built by formulating the objective function, which is minimising the joint total cost between a buyer and a vendor. The model is developed on the basis of a simulation system, and optimisation is carried out by utilising a Genetic Algorithm that has been embedded in the simulation system. This technique is called optimisation–simulation closed loop. The vendor actual condition, which deals with uncertain demands from the main buyer and other small buyers, is considered. To analyse timely supply chain events, a simulation system is developed. A new optimisation model for the single-vendor single-buyer supply chain system with fuzzy demand is developed on the basis of the simulation system. The use of optimisation–simulation closed loop is also a new finding. In this study, the optimisation model of the supply chain under consideration is developed by taking into account a specific condition in which the vendor receives demands from the main buyer and other small buyers. Naturally, buyer demand is uncertain and has been modelled using a fuzzy set. The use of optimisation–simulation closed loop enables the supply chain to make the optimum decision when at the steady state condition.