A fuzzy programming model for optimizing the inventory management problem considering financial issues: A case study of the dairy industry

In today's competitive environment as well as the dynamic nature of the business environment, managing inventory and financial flows has become more challenging. As inventory and financial flows are interdependent, setting an optimal plan for managing them simultaneously can have a dramatic impact on the company's efficiency The literature indicates that previous studies have rarely considered financial considerations in the inventory management problem. Thus, this study proposes a multi-objective programming model to optimize the inventory management problem for dairy products. In the model, material substitution is considered in order to assist in managing the inventory value. A fuzzy model is developed to deal with uncertain parameters such as inventory costs, raw milk volume, and the cost of purchasing raw materials. Then, a real-world case study is conducted in the Iranian dairy industry. Additionally, the proposed model is solved using a multi-choice goal programming approach. Further, sensitivity analyses are conducted in order to investigate the impact of critical parameters on the research question. Finally, managerial insights and theoretical implications are discussed. Based on the results, raw milk volume decreases inventory costs, and material substitution decreases inventory value as obsolete materials are used in products.