Continuous review inventory system for intuitionistic fuzzy random demand under service level constraint

An intuitionistic fuzzy random variable (IFRV) handles ambiguous, incomplete and ill-known data or information along with statistical variability, and deals with fuzzy number, grade of membership and non-membership functions and probability distribution function. So, taking such advantages of IFRV, we extend the classical continuous review inventory system in intuitionistic fuzzy random (IFR) environment by considering demand rate as IFRV. Due to uncertain variability, demand may suddenly increase, consequently, item shortage (stock out) may occur in the inventory system. To minimize the shortage quantity, fuzzy service level constraint and reorder level pertaining to safety stock are considered here. Service level constraint ensures that a certain fraction of demand to be fulfilled by on-hand inventory, whereas safety stock is kept against anticipation of shortage. Furthermore, we develop a methodology to compute the fuzzy expected shortage quantity for IFR inventory system, and determine the order quantity and reorder level. The proposed model is illustrated with numerical example and sensitivity analysis by changing the values of key parameters, which also helps in delineating the managerial insights.

Automated summary

This study extends the classical continuous review inventory system using intuitionistic fuzzy random variables and considers fuzzy service level constraints and safety stock reorder levels to minimize material shortages in the inventory system.