An application of cost-effective fuzzy inventory controller to counteract demand fluctuation caused by bullwhip effect

Guangyu Xiong (1) , Petri Helo

1 Industrial management

This paper develops a fuzzy inventory model to counteract the demand fluctuation in supply demand networks, which combines fuzzy logic controller with (s, S) policy based on EOQ (Economic Order Quantity) model. Following a literature review and a discussion of counteractions to the bullwhip effect and the obstruction of general counteraction in supply demand networks, a multi-echelon fuzzy inventory model in supply demand networks is proposed. A simulation model with one-echelon and two-echelon supply demand network is built and tested for (s, S) policy based on the classical EOQ (Economic Order Quantity) model and the proposed fuzzy inventory model. Based on the simulation, results of the relevance performance are presented and discussed, which show that the proposed multi-echelon fuzzy inventory model provides not only a cost-effective management of inventory (e.g. lower inventory levels and cost) in market uncertainty, but also another effective alternative for counteracting demand fluctuation. In particular, the proposed multi-echelon fuzzy inventory model shows benefit in counteracting demand fluctuation in multi-echelon supply demand networks. Finally, some conclusions and suggestions for further research works are presented.

Mots clés: Physical Sciences

Guangyu Xiong, Petri Helo. An application of cost-effective fuzzy inventory controller to counteract demand fluctuation caused by bullwhip effect. International Journal of Production Research, 2006, 44 (24), pp.5261-5277. ⟨10.1080/00207540600600114⟩. ⟨hal-00512890⟩