978-1-4673-0024-7/10/$26.

00 2012 IEEE 465

2012 9th International Conference on Fuzzy Systems and Knowledge Discovery (FSKD 2012)
Optimization of fuzzy inventory model under fuzzy
demand and fuzzy lead time using Exponential
fuzzy number
P.K.De
1
, Apurva Rawat
2
,
1. Department of Mathematics, National Institute of Technology, Silchar, 788010, Assam , India.
2. AIM & ACT, Banasthali University, Banasthali, 304022, Rajasthan, India.
Emails : 1. pijusde@rediffmail.com 2. apurva rawat@rediffmail.com
AbstractTo deal with imprecision parameters in inventory
problems, fuzzy set theory has been applied to real-world decision
making problems. In fuzzy set theory, a corresponding member-
ship function is usually employed to quantify such imprecision
parameters. In the present paper a realistic inventory model
with demand per day items and the lead time for the order
of the items are imprecise and non-linear in nature and are
characterized by exponential fuzzy numbers. The optimal order
quantity is computed with the help of graded mean integration
representation method which has proved to be simpler and
appropriate for the above problem. Again the k-preference
for calculating the mean of fuzzy numbers is user dependent.
[Under these conditions, the optimal values of the reorder point
and safety stock are calculated. The fuzzy inventory model is
thus optimized under fuzzy demand and fuzzy lead lime. The
sensitivity analysis of the parameters is done for the variation in
the levels of service.
Keywords: Fuzzy InventoryOrder
QuantityFunction PrincipleGraded Mean Integration
RepresentationExponential Fuzzy NumberStock outReorder
PointService Level
I. INTRODUCTION
The real world inventory control problems are imprecisely
dened and human interventions are often required to solve
these decision-making problems. The present study is based
on Hseihs[3] work which discussed optimization of fuzzy
inventory models under fuzzy demand and fuzzy lead time.
In the present model of inventory control, the demand per
day and the lead time are represented by exponential fuzzy
numbers instead of trapezoidal fuzzy numbers keeping in view
again that the demand and lead time may not be always crisp
quantities. A fuzzy-inventory model under the preference of
the decision maker for the quantity which is ordered, is shown
rst and later on the optimal order quantity is computed using
graded mean integration representation method.
Here also, the optimal solutions of the models are determined
by using principle of maxima-minima. Hsieh[4] also intro-
duced some fuzzy inventory models under decision makers
preference. In the present fuzzy-inventory model, under fuzzy
annual demand based on the fact that fuzzy total annual
inventory cost should be minimum and some preference[4],
the optimal order quantity is derived.
II. METHODOLOGY
The membership function of exponential fuzzy number is
represented rst. The mean is calculated by Graded Mean
Integration Representation method for defuzzifying fuzzy total
annual inventory cost. Also, in order to calculate fuzzy average
demand in fuzzy lead time, we dene the mean of exponential
fuzzy number using the same method. Some fuzzy arithmetical
operations for exponential fuzzy numbers using Chens[6]
Second Function Principle are shown.
Firstly, a fuzzy-inventory model under fuzzy annual demand
for order quantity is introduced. This model is used to obtained
the optimal order quantity assuming that the fuzzy total
annual inventory cost should be minimum. This fuzzy cost
is a combination of total annual holding and setup costs and
its defuzzication is done with k-preference[4]. The optimal
order quantity is determined by using both the operations
of Second Function Principle and Graded Mean Integration
Representation method and the optimal number of orders in a
year are also obtained. Hence, some conclusion is drawn and
remarks are given.
A. Exponential Fuzzy Number
Let A = (a, b, , ; w); 0 < w 1 be an exponential fuzzy
number with membership function

A
(x) =

we

ax

, x a
w, a x b
we

xb

, x b
(II.1)
where, a, b are real numbers and , are positive real
numbers. A = (a, b, , )
E
denotes exponential fuzzy number
when w=1.
B. Graphical Representation of exponential fuzzy number:
466
C. Arithmetic Operations for Exponential Fuzzy Number
Let A = (a
1
, b
1
,
1
,
1
; w
1
)
E
and B = (a
2
, b
2
,
2
,
2
; w
2
)
E
are two generalized exponential fuzzy numbers with
w =min{w
1
, w
2
} then some arithmetic operations are dened
as follows:
(1) Addition of A and B
AB = (a
1
+a
2
, b
1
+b
2
,
1
+
2
,
1
+
2
; w)
E
(2) Difference of A and B
AB = (a
1
a
2
, b
1
b
2
,
1
+
2
,
1
+
2
; w)
E
(3) Product of A and B
AB = (a, b, , ; w)
E
where, T = {a
1
a
2
, a
1
b
2
, b
1
a
2
, b
1
b
2
},
P = {
1

2
,
1

2
,
1

2
,
1

2
}
a = min T = k
th
element of T,
b = max T = r
th
element of P,
= k
th
element of P & = r
th
element of P
(4) Multiplication of A with scalar
mA =

(ma
1
, mb
1
, m
1
, m
1
; w)
E
, m R
+
(mb
1
, ma
1
, m
1
, m
1
; w)
E
, m R

(5) Division of A by B
AB = (
a1
b2
,
b1
a2
,
1
2
,
1
2
; w)
E
III. H-LEVEL GRADED MEAN INTEGRATION
REPRESENTATION OF EXPONENTIAL FUZZY NUMBER
Let A = (a, b, , ; w); 0 < w 1, be an exponential fuzzy
number where a,b are real numbers and , are positive real
numbers. Again let L(x)=we

ax

and R(x)=we

xb

denote the
left are right branches of A . Then, L
1
and R
1
represent
the inverse functions of L and R respectively.
The Graded Mean integration representation of A can be
expressed as
P(A) =

w
0
[
h(L
1
(h)+R
1
(h))
2
] dx

w
0
hdh
(III.1)
h-level graded mean value of A
The graded mean integration representation of A under k-
preference,0 k 1, of manager can be expressed as
P
k
(A) =

w
0
h[(kL
1
(h)+(1k)R
1
(h)]
2
dh

w
0
hdh
=
1
2

w
0
h[kL
1
(h) + (1 k)R
1
(h)] dh

w
0
hdh
=
1
w
2

w
0
h[k(a ln(
w
h
)) + (1 k)(b + ln(
w
h
))]dh
=
1
w
2

w
0
h[ka + (1 k)b k ln(
w
h
) + (1 k) ln(
w
h
)] dh
=
1
w
2

w
0
h[ka + (1 k)b]dh
+
1
w
2

w
0
h[k ln(
w
h
) + (1 k) ln(
w
h
)]dh
=
ka + (1 k)b
w
2

w
0
hdh
+
(1 k) k
w
2

w
0
hln(
w
h
) dh
P
k
(A) =
ka + (1 k)b
2
+
(1 k) k
4
(III.2)
A. Numerical Example:
Let A=(1, 2, 3, 7)
E
be an exponential fuzzy number with
w=1. Then,
P
k
(A) =
k 1 + (1 k) 2
2
+
(1 k) 7 k 3
4
=
11 12k
4
Say, k=0.4, is the preference of the manager, then
P
k
(A) = M
A
=
11 12 0.4
4
= 1.55
IV. NOTATIONS USED
c : carrying cost
o : ordering cost

D : fuzzy total demand

Q : order quantity

N : fuzzy number of orders per year

M

D
: mean of

D
Q

: optimal order quantity

N : optimal number of orders per year
V. OPTIMAL ORDER QUANTITY WITH FUZZY TOTAL
DEMAND
Let the total holding cost, i.e.,
THC = c
Q
2
(V.1)
and fuzzy total ordering cost, i.e.,
FTOC = o (D Q) (V.2)
467
Then the fuzzy total cost, i.e.,
FTC = THC +FTOC (V.3)
= c
Q
2
o (

D Q)
=
cQ
2
o ((a, b, , )
E
Q)
=
cQ
2
o(
a
Q
,
b
Q
,

Q
,

Q
)
E
=
cQ
2
(
oa
Q
,
ob
Q
,
o
Q
,
o
Q
)
E
= (
cQ
2
+
oa
Q
,
cQ
2
+
ob
Q
,
cQ
2
+
o
Q
,
cQ
2
+
o
Q
)
E
P
k
(FTC) =
k(
cQ
2
+
oa
Q
) + (1 k)(
cQ
2
+
ob
Q
)
2
+
(1 k)
o
Q
k
o
Q
4
=
cQ
4
+
o
4Q
[k(2a ) + (1 k)(2b +)]

P
k
(FTC)
Q
=
c
4

o
4Q
2
[k(2a ) + (1 k)(2b +)]
For maximum(optimum) value of P
k
(FTC) its partial deriva-
tive with respect to Q must be zero. Therefore,
c
4

o
4Q
2
[k(2a ) + (1 k)(2b +)] = 0 (V.4)
Q

o
c
[k(2a ) + (1 k)(2b +) (V.5)
Optimal number of orders

N =

D Q (V.6)

= (a, b, , ) Q

(V.7)

= (
a
Q

,
b
Q

,

Q

,

Q

) (V.8)
For defuzzication, the mean
M

N
=
a
Q

+
b
Q

2
+

4
(V.9)
N =
2(a +b) +
4Q

(V.10)
A. Numerical example
Here is an illustration for the above result. The sensitivity
analysis and its graphical representation is shown.
Let the costs c=0.75 and o=150. The preference k=0.5 and
demand

D = (9900, 10100, 2, 3)
E
.
Then, using equations (V.5) and (V.10), we get Q

=
2000.025 2000 and N = 5.00025 5.
Sensitivity analysis of Q* under different values of k-
preference in the range [0,1]:
k: 0 0.1 0.2 0.3
Q

: 2010.124 2008.109 2006.091 2004.071

k: 0.4 0.5 0.6 0.7
Q

: 2002.049 2000.025 1997.999 1995.971

k: 0.8 0.9 1
Q

: 1993.941 1991.909 1989.874

Graphical representation and analysis for the above set of
observations:
Observe that the graph is nearly linear. This shows that the op-
timal order quantity increases linearly with the corresponding
increase in k- preference.
VI. CONCLUSION
In this paper exponential fuzzy numbers have been used to
characterize the fuzzy parameters.K-preference has been used
to calculate the mean of fuzzy numbers and then optimal value
of the reorder point and safety stock are calculated. Sensitivity
analysis is also shown.
VII. REFERENCES
1. Dubois D and Prade H (1980) Fuzzy sets and systems.
Academic Press, New York.
2. Zimmermann H J (1991) Fuzzy set theory and its
applications. 2
nd
Edition., Kluwer Academic Publishers,
Boston/Dorgrecht/London.
3. Hseih C H (2004) Optimization of fuzzy inventory models
under fuzzy demand and fuzzy lead time. Tamsui Oxford
journal of management sciences, 20(2): 21-36.
4. Hseih C H (2003) Optimization of Fuzzy Inventory Models
under k-preference. Tamsui Oxford Journal of Mathematical
Sciences 19(1): 79-97.
5. Yao J S, Wu K M (2000) Ranking fuzzy numbers based on
decomposition principle and signed-distance. Fuzzy sets and
systems, 116: 275-288.
6. Chen S H,Li G C (2000) Representation, Ranking, and
Distance of Fuzzy Number with Exponential Membership
Function Using Graded mean Integration method. Tamsui
Oxford journal of management sciences, 16(2): 123-131.
7. Park K S (1987) Fuzzy set theoretic interpretation of
economic order quantity. IEEE transactions on systems, man
& cybernetics, 17: 1082-1084.