Fuzzy modeling approach to on-hand stock levels estimation in (R, S) inventory system with lost sales

Ester Guijarro, Eugenia Babiloni, Maria Jose Canós-Darós, Lourdes Canós-Darós, Sofía Estellés
2020 Journal of Industrial Engineering and Management  
Purpose: One challenge in inventory control models is to know the stock available at the beginning of the cycle to satisfy future demands, i.e. to know the on-hand stock levels at order delivery. For inventory managers, this knowledge is necessary to both determine service levels and establish the control parameters of the inventory policy. However, the calculation of on-hand stock levels when unfilled demand is lost is mathematically complex since on-hand stock cannot be negative by
more » ... The purpose of this paper is to propose a new approach to estimate on-hand stock levels when the inventory is periodically reviewed and unfilled demand is lost, through the use of fuzzy techniques. Design/methodology/approach: This paper applies fuzzy set techniques for the calculation of the on-hand stock levels at order delivery in the lost sales context, based on the uncertainty that real demand introduces. To this end, we propose a new approach based on modeling the on-hand stock as an imprecise Markov chain using possibility functions, which reduces significantly the computational effort required to obtain the on-hand stock levels. Findings: To illustrate the performance of the proposed method, two experiments are carried out. The first experiment shows that the proposed fuzzy method correctly calculates on-hand stock levels with insignificant deviation with respect the exact vector. Additionally, the results illustrate that the fuzzy method simplifies the calculation and highly reduces the computational efforts. The second experiment shows the performance of the fuzzy method when it is used to estimate service levels by means of the fill rate. The results show that the proposed method accurately estimates the fill rate with average deviations lower than 0.00015. Practical implications: Knowing the on-hand stock vector is important for inventory managers to establish the control parameters of the system, i.e. to determine the minimum base stock level, S, that guarantees the achievement of a target service level. T [...]
doi:10.3926/jiem.3071 doaj:851ac3277ac04ecd8ebdb4032d89b3c5 fatcat:ihkgkrwvzfg6fjwtslqsdrhsi4