Optimization of Inventory Decisions Using Fuzzy Cognitive Mapping in an Automobile Component Manufacturing SME

Abstract

Inventory optimization is a serious challenge to industries around the globe. It poses a challenge to the decision-makers as poor judgment or decision can be catastrophic to any enterprise’s fortunes regardless of its size and sector. The complexity arises due to the dynamic movement behavior of various inventories in the supply chain. The main aim of the current research work is to identify the most central and important concepts affecting inventory optimization in an automobile component manufacturing SME located in Delhi-NCR. The variables considered for inventory optimization are identified through a thorough literature review. The variables affecting inventory optimization are capital available, usage level, cost of procurement, credit time and material availability. The current research work makes use of Fuzzy cognitive mapping (FCM) for inventory optimization by identifying the interrelations between the various factors and the most central concept. Also, the paper aims at identifying the positive and negative associations among the various variables under study, which affect the inventory optimization decisions. The importance of the various variables is measured by making a note of the incoming and outgoing arcs for each variable in the directed graph. It is found that the most central concept is the cost of procurement.