Multicriteria ranking of inventory replenishment policies in the presence of uncertainty in customer demand

This paper considers the ranking of alternative replenishment policies for a single-location inventory when customer demand is confined to a single pr oduct. It is supposed that customer demand is uncertain and described by im precise linguistic terms defined by fuzzy sets. For example, "demand is abo ut d", or "demand is more or less between d(L) and d(U)", or more complex " demand is about d, but there is a possibility to be 2d", etc. Four alternat ive replenishment policies are considered in particular: (1) fixed cycle-fi xed order quantity, (2) fixed cycle-variable order quantity, (3) variable r eview period-fixed order quantity, and (4) variable review period-variable order quantity. With each replenishment policy a number of criteria are ass ociated. Typical criteria examined are: (a) average fill rate, (b) inventor y holding cost per item delivered, (c) regularity of the replenishment orde rs with regard to time and quantity of ordering. Criteria values for each r eplenishment policy can be obtained either analytically or by using a simul ation technique, or they are linguistic subjective judgements defined by fu zzy sets, like, for example, the values of criterion (c). In order to choos e the best replenishment policy, a procedure for selecting a compromised op timistic-pessimistic solution is developed and applied. It enables the comp arison of a finite number of alternative replenishment policies with respec t to a number of criteria, simultaneously, when the criteria values are eit her cardinal or linguistic terms, and the relative weights of the criteria are vaguely expressed. An illustrative example is given. (C) 2001 Elsevier Science B.V. All rights reserved.