Uncertainty in Supply Chain Inventory Management: A Fuzzy Approach

Inventory represents from twenty to sixty percent of most manufacturing firms' total assets. Inventory management policies can thus prove critical in drawing the profits of such firms (Arnold, 1998) and their relevance clearly increase when Supply Chains (SCs) rather than single firms are considered. Inventory management is in fact a major issue in Supply Inventory decisions are often made independently by the SC actors based on the local inventory status and local performance objectives (local policies). Local policies are simple to be defined and implemented. Yet they ignore the implications that a decision can have on other stages, so sub-optimizing the whole SC's performance. Also, the lack of a coordinated inventory management policy often causes the bullwhip effect, namely an amplification of demand variability that increases toward the upstream stages (Lee et al. 1997). The bullwhip effect results in excessive inventory investments, lost revenues, misguided capacity plans, ineffective transportation, missed production schedules, and poor customer service (Lee, Billington, 1992). In addition, it increases the time needed by upstream stages to perceive changes in customer's demand, so making the whole SC less responsive to customers' requirements (Christopher, 1992). These inefficiencies reveal dangerous in both mature markets, i.e. markets where customers value the service as much as (or even more than) the good itself, and innovative ones, such as fashion or computers, where the lack of responsiveness may lead to either lost sales or stock obsolescence (Fisher, 1997). Tracing back to Forrester (1961), many scholars have studied these problems and emphasized the need of coordinated policies so as to