EOQ formula when inventory cost is fuzzy

Mirko Vujošević, Dobrila Petrovic, Radivoj Petrović

Research output: Contribution to journalArticle

131 Citations (Scopus)

Abstract

Various types of uncertainties and imprecision are inherent in real inventory problems. They are classically modeled using the approaches from the probability theory. However, there are uncertainties that cannot be appropriately treated by usual probabilistic models. The questions how to define inventory optimization tasks in such environment and how to interpret optimal solutions arise. This paper considers the modification of EOQ formula in the presence of imprecisely estimated parameters. For example, holding and ordering costs are often not precisely known and are usually expressed by linguistic terms such as: "Holding cost is approximately of value ch", or: "Ordering cost is about value co or more". These imprecise parameters are presented by fuzzy numbers, defined on a bounded interval on the axis of real numbers. Alternative approaches to determining the optimal order quantity in a fuzzy environment are developed, illustrated by a selection of examples, and discussed.

Original languageEnglish
Pages (from-to)499-504
Number of pages6
JournalInternational Journal of Production Economics
Volume45
Issue number1-3
DOIs
Publication statusPublished - 1 Aug 1996

Keywords

  • EOQ
  • Fuzzy arithmetic
  • Fuzzy number
  • Imprecision
  • Uncertainty

ASJC Scopus subject areas

  • Economics and Econometrics
  • Industrial and Manufacturing Engineering

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