Variable demand model for periodically reviewing with allowing refunding parts of the orders

Abstract

Depending on a field study for one of the largest iron and paints warehouses in Egypt, this paper presents a new multi-item periodic review inventory model considering the refunding quantity cost. Through this field study, we found that the inventory level is monitored periodically at equal time intervals. Returning a part of the goods that were previously ordered is permitted. Also, a shortage is permissible to occur despite having orders, and it is a combination of the backorder and lost sales. This model has been applied in both crisp and fuzzy environments since the fuzzy case is more suitable for real-life than crisp. The Lagrange multiplier technique is used for solving the restricted mathematical model. Here, the demand is a random variable that follows the normal distribution with zero lead-time. Finally, the model is followed by a real application to clarify the model and prove its efficiency.