Economic Design of Multi-echelon Inventory System with Variable Lead Time and Service Level Constraint in a Fuzzy Cost Environment

Normally, human based industrial decision making involves both quantitative and qualitative input factors such as ordering cost, setup cost, etc. Thus the practitioners should be careful in accounting flexibility in the input factors. This paper optimizes an inventory system by employing mathematical model with variable lead time and service level constraint (SLC) in a fuzzy cost environment. Fuzziness is established by allowing the cost components imprecise and vague to certain extent. Trapezoidal and triangular fuzzy numbers are used to represent these characteristics. We also use signed distance method to defuzzify the fuzzy joint total expected cost and differential calculus optimization technique is adopted to find all optimal solutions to the model. Numerical results highlighting the sensitivity in the decision variables are also described.