International Journal of Statistics and Reliability Engineering

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Vol 11, No 2:

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Risk-Neutral and Risk-Averse Optimal Decision Policy for a Fuzzy Inventory System under Bi- Level Trade Credit Financing and Imprecise Transport

Abstract

Global merchants have received particular attention on abnormal transport risks in uncertain situations. Transport risks are considered in the mishandling of products at the retailer due to transport. Due to transport risks caused by the pandemic, we face the challenge of inventory quality uncertainty. The inventory holding cost, set-up cost, ordering cost, etc., are considered trapezoidal fuzzy numbers due to insufficient statistics about the stock information in business under various circumstances. Due to inflation, the interest rate for the purchased items under trade credit is also imprecise. Considering these challenges, a fuzzy inventory model under transport risks is investigated for the integrated inventory system consisting of the single supplier-single retailer. The objective of this paper focuses on obtaining optimal replenishment policies for risk-averse and risk-neutral situations. The risk-neutral solution aims to identify the optimal quantity of batch shipments from the supplier to a retailer and the retailer's cycle time. This is done by minimizing the expected total cost using the proposed solution procedures and numerical algorithms. The suggested model restricts the range of potential solutions for risk-averse decision- making to a maximum limit of defective products in the event of unforeseen circumstances. The sensitivity analysis reports are also presented graphically by changing the percentage of the graded mean value of the inventory cost parameters. The total cost of inventory goes up with a risk-averse strategy as the projected amount of defective products exceeds the upper bound.

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ISSN(P) 2350-0174

ISSN(O) 2456-2378

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