Continuous Review Inventory Model with Fuzzy Stochastic Demand and Variable Lead Time

Abstract

The present study considers a continuous review inventory system for the inventory model involving fuzzy random demand, variable lead-time with backorders and lost sales. The authors first use the triangular fuzzy number count upon lead-time to construct a lead-time demand. Using credibility criterion, the expected shortages are calculated. Without loss of generality, the authors have assumed that all the observed values of the fuzzy random variable, representing the demand are triangular fuzzy numbers. Consequently, the value of total expected cost in the fuzzy sense is derived using the expected value criterion or credibility criterion. For the proposed model, the authors provide a solution to find the optimal lead-time and the optimal order quantity along with the reorder point such that the total expected cost in the fuzzy sense has a minimum value. Numerical study is also provided to illustrate the results of proposed model.