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International Journal of Management Science and


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An EOQ model with backlogging


a b
Sujit Kumar De & Shib Sankar Sana
a
Department of Mathematics, Midnapore College, Medinipur (W), West Bengal, India
b
Department of Mathematics, Bhangar Mahavidyalaya, University of Calcutta, Bhangar,
West Bengal, India
Published online: 19 Jan 2015.

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Management Science and Engineering Management, DOI: 10.1080/17509653.2014.995736

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International Journal of Management Science and Engineering Management, 2015
http://dx.doi.org/10.1080/17509653.2014.995736

An EOQ model with backlogging


Sujit Kumar Dea and Shib Sankar Sanab*
a
Department of Mathematics, Midnapore College, Medinipur (W), West Bengal, India; bDepartment of Mathematics, Bhangar
Mahavidyalaya, University of Calcutta, Bhangar, West Bengal, India
(Received 25 August 2014; final version received 2 December 2014)

This paper deals with a new approach of linguistic dichotomous fuzzy variables for a classical backordered EOQ (Economic
Order Quantity) model with PE (Promotional Effort) and selling price dependent demand rate. In practice, we have observed
that the demand rate during a shortage period decreases with time. Based on these assumptions, we have developed a cost
minimization problem (a crisp model) by trading off setup cost, inventory cost, backordering cost and cost for promotional
effort. Then, we have studied a fuzzy model by considering the coefficient vectors as pentagon fuzzy numbers associated
with some co-ordinates. Defuzzification is made with the help of the center-of-gravity method followed by a ranking index
and the Euclidean distance of the objective function. Considering a numerical example, phi- (w-)coefficients have been
computed for each method and a decision is made according to the natural characteristics of the decision variables. Finally,
conclusions are drawn, explaining the justification of the model.
Keywords: backorder inventory; pentagon fuzzy number; center of gravity; ranking index; Euclidean distance; phi-
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coefficient; optimization

JEL Classification: C01; C02; C61; M37

1. Introduction (Goyal & Chang, 2009; Soni & Shah, 2008; Zhou, Min, &
The appropriate stock of inventory is a major concern in Goyal, 2008).
supply chain management (Cárdenas-Barrón, 2007; Cár- Owing to advances in modern research, fuzziness of
denas-Barrón & Porter, 2013; Cárdenas-Barrón, Taleiza- key parameters and variables is essential for analyzing any
deh, & Treviño-Garza, 2012a; Cárdenas-Barrón, Teng, kind of inventory control problem. In many cases,
Treviño-Garza, Wee, & Lou, 2012b; Cárdenas-Barrón & fuzziness arises owing to the variable meaning of several
Treviño-Garza, 2014; Cárdenas-Barrón, Wee, & Blos, cost parameters and demand rates with respect to the
2011; He, Zhao, Zhao, & He, 2009; Konstantaras, Skouri, & ordering statement in a specific language. Zadeh (1965)
Papachristos, 2009; Roy, Sana, & Chaudhuri, 2014; Sana, first developed the concept of fuzzy set theory. Later,
2014; Sana, Mondal, Sarkar, & Chaudhuri, 2011; Sarkar, Bellman and Zadeh (1970) applied fuzzy set theory to
2013; Teng, Cárdenas-Barrón, & Lou, 2011) which several decision making problems in operations research.
fluctuates frequently with the uncertain nature of demand Thereafter, numerous research articles have reported
in the market. Quite often, the uncertain nature of demand studies in this direction. Kaufmann and Gupta (1988)
and the delivery lead time cause shortages. Customer developed a fuzzy mathematical model in engineering and
demand in stock-out situations is either fully or partially management science. Zimmermann (1978) proposed
backlogged, depending on the patience of the customers. fuzzy linear programming with several objective func-
Among others, the work of Ghosh and Chaudhuri (2006), tions. Several types of defuzzification methods are
Ghosh, Khanra, and Chaudhuri (2011), Sana (2013), Sana available in the fuzzy literature (Allahviranloo &
and Goyal (2014), Sarkar, Cárdenas-Barrón, Sarkar, and Saneifard, 2012; Bass & Kwakernaak, 1977; Cheng,
Singgih (2014), Sarkar, Sana, and Chaudhuri (2010, 1998; Chu & Tsao, 2002; Ezatti & Saneifard, 2010).
2013b), Sarkar, Saren, and Wee (2013a), Sarkar and Sarkar Vojosevic, Petrovic, and Petrovic (1996) fuzzified
(2013), and Skouri, Konstantaras, Papachristos, & Ganas the order cost into a trapezoidal fuzzy number in their
(2009) should be mentioned. backorder model. Based on this rule, Wu and Yao (2003)
The demand of the end customers can be increased by studied fuzzy inventory with backordering for a fuzzy
several types of promotional efforts. Many studies have order quantity and a fuzzy shortage quantity. Lee and Yao
focused on the effect of promotions on sales (Goyal & (1999) investigated an economic order quantity model
Gunasekaran, 1995; Ramanathan & Muyldermans, 2010; without backordereing in the fuzzy sense, using the fuzzy
Sana, 2010, 2011a,b). Generally speaking, customers’ extension principle. Kao and Hsu (2002) developed a lot
purchasing behaviour is predicted from implication of size reorder point inventory model for fuzzy demands,
promotions such as price discounting, advertising, free using the a-cut of the fuzzy numbers. They used the
gifts, better services, delay-in-payments, stock display, etc ranking index method to solve the model. Authors like De,
Kundu, and Goswami (2003) suggested an EPQ model
for fuzzy demand rate and fuzzy deterioration rate, using
the a-cut of the membership function for the fuzzy
*Corresponding author. Email:shib_sankar@yahoo.com parameters. De, Kundu, and Goswami (2008) presented an
q 2015 International Society of Management Science and Engineering Management
2 S.K. De and S.S. Sana

economic ordering policy of deteriorated items with D: The normal demand rate per month when unit selling
shortage and fuzzy cost coefficients for vendor and buyer. price reaches r/t.
Mitra Basu, Mahapatra, and Mondal (2012) provided an R: Normal demand rate per month for without back-
algorithm based mean potentiality approach to obtain a order period.
balanced fuzzy soft set solution in a decision making D0 : Demand rate per month during shortage period.
problem. Kumar, De, and Goswami (2012) developed a k: Publicity (advertising) cost per cycle time ($).
fuzzy model with ramp type demand rate and partial m: A positive number.
backlogging. Ojha, Das, Mondal, and Maiti (2013) t1: Inventory run time (months)..
introduced a modified subgradient method for optimiz- t2: Shortage period (months).
ation and its effectiveness in a fuzzy transportation model T: Cycle time (months).
in which transportation costs were imprecise. Recently, De Z: Average cost of the inventory ($).
and Sana (2013a,b) developed a fuzzy and an intuitionistic
fuzzy backorder EOQ model, respectively, considering the
Assumptions
demand function as a function of promotional effort and
selling price. Taleizadeh, Niaki, Aryanezhad, and Shafii
1. Replenishment is instantaneous but its order size is
(2013) discussed a hybrid method of fuzzy simulation and
finite.
a genetic algorithm to optimize constrained inventory
2. The time horizon is infinite (months)
control systems with stochastic replenishments and a fuzzy
3. Shortages are allowed and the demand rate in a
demand pattern. Recently, De and Sana (2014), De,
shortage period is dependent on the length of the
Goswami, and Sana (2014) and Das, De, and Sana (2014)
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period and the rate is constant throughout the


investigated inventory models including several issues in a
period [0,t2]. Here, the demand rate during a
fuzzy environment.
shortage period is D0 ¼ Re2ðs2rÞt2 , where r is PE
In the existing literature, no articles under dichotomous
and 0 , r , s. The parameter s (sigma) is the
variables such as strong fuzzy and weak fuzzy numbers
decision maker’s choice; it can be determined
have yet been discussed. Earlier authors have simply placed
from practical experience of the nature of the
their results according to the outputs of the objectives and
demand function for a particular item. Obviously,
have interpreted them accordingly. But in our study, we
r is less than s, because D0 is a decreasing function
have incorporated the general motivation of human
over a shortage period. The notion is that D0 ! 0
behavior in considering the ordering and shortage quantities
when t2 ! 1.
in the model. Then, we have used the phi- (w-)coefficient to
4. The initial demand rate is R ¼ Der2tp , where p is
select the best optimal policy. In the proposed model, we
the unit selling price and 0 # t , 1. The notion is
have studied a backlogging EOQ model within a pentagon
that R ! 0 when p ! 1.
fuzzy environment, and defuzzification is accomplished
with the help of the center-of-gravity method. Next, we
have optimized the ranking index function and Euclidean 3. Crisp mathematical model
distance function considering both of them as strong fuzzy
In this model (Figure 1), the inventory starts with
and weak fuzzy numbers. Numerical illustrations are made
shortages and it continues up to time t2. In this period [0,
with LINGO software. Finally, decisions are made in the
t2], the demand rate is D0 . At time t2, the total amount of
conclusions section according to the values of the phi-
shortages (S) during the period [0,t2] is adjusted from the
coefficients in a numerical example.
lot size (q). The remaining amount (q 2 S) meets the
demand with rate R for the period [0,t1]. Hence, the total
cycle length is T ¼ (t2 þ t1). Therefore, the average cost
2. Notation and assumptions function by trading off setup cost, inventory cost, shortage
The following notation and assumptions are used to
develop the proposed model.

Notation
q: Order quantity per cycle.
S: Shortage quantity per cycle.
Inventory level

c 1: Setup cost per cycle ($).


c 2: Inventory holding cost per unit quantity per cycle (q−s) −R
($). t2
c 3: Shortage cost per unit quantity per cycle ($).
p: Selling price per unit item ($).
r: Promotional effort (PE), a positive number.
s: A positive number associated with demand rate −D′ s t1 Time
during shortage period. T
t: A fractional number associated with unit selling
price in normal demand rate. Figure 1. Inventory versus time.
International Journal of Management Science and Engineering Management 3

cost and promotional cost is words such as kCheap; High; Veryhigh; Expensivel whose
membership values are expressed as shown in Table 2.
c1 c2 Rt21 c3 D0 t22 However, the demand rate and other parameters are
Z¼ þ þ þ kr m ; ð1Þ
T 2T 2T likely to be expressed as kLow; Average; Moderate; Highl
and their membership values may be expressed as shown
where
in Table 3.
9
R ¼ Der2tp >
>
The membership function of a parameter for PFN is
>
rð1þt2 Þ2tp2st2 >
> given below (see Figure 2):
D0 ¼ Re2ðs2rÞt2 ¼ De =
ð2Þ 8
S ¼ D0 t2 ¼ Dt2 erð1þt2 Þ2tp2st2 > > 0 if x # a1 and x $ a5
>
> >
>  
>
> >
>
q ¼ Der2tp ft1 þ t2 e2ðs2rÞt2 }: ; >
> w x2a1
if a1 # x # a2
>
>
1 a2 – a1
>
>  
>
< w þ ð1 2 w Þ x2a2
Now, our objective is to minimize the cost function Z in 1 1 a3 – a2 if a2 # x # a3
mðxÞ ¼
crisp sense, i.e. >
>  
>
> þ ð1 2 Þ a4 2x
if a3 # x # a4
>
> w 2 w2
>
>
a4 – a 3
c1 c2 Rt21 c3 D0 t22 > 
> 
Minimize Z ¼ þ þ þ kr m ð3Þ >
> 2x
T 2T 2T
a
: w2 a55– a4 if a4 # x # a5

For the optimum value of Z in Equation (3), we have ð6Þ


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dZ
¼ 0; which implies 4.2. Basic arithmetic operations on ordered PFN
dt2
 
ðs 2 rÞt2 Let A ¼ ka1 ; a2 ; a3 ; a4 ; a5 l and B ¼ ½b1 ; b2 ; b3 ; b4 ; b5  be
2c2 RðT 2 t2 Þ þ c3 t2 1 2 Re2ðs2rÞt2 ¼0 : ð4Þ two ordered PFNs, then for the usual arithmetic operations
2
{þ , 2 , £ , 4 }, namely addition, subtraction, multipli-
Solving the above, we have t2 ¼ t*2 (say). cation and division between A and B are given as follows:
Also,
  (i) A þ B ¼ ka1 þ b1 ; a2 þ b2 ; a3 þ b3 ; a4 þ b4 ; a5 þ b5 l.
d2 Z c 2 R c 3 R ðs 2 rÞ2 t22 (ii) A 2 B ¼ ka1 2 b5 ; a2 2 b4 ; a3 2 b3 ; a4 2 b2 ; a5 2 b1 l.
¼ þ 1 þ 2 2t 2 ð s 2 r Þ e2ðs2rÞt2 . 0
dt22 T T 2 (iii) A £ B ¼ kMinðai bj Þ; Maxðai bj Þl ; i; j ¼ 1; 2; 3; 4; 5:;
ð5Þ (iv) A=B ¼ kMinðai =bj Þ; Maxðai =bj Þl for bj – 0; ; i; j ¼
1; 2; 3; 4; 5:
holds always. Therefore, the given objective function has a
unique minimum, keeping r as a fixed number.
Table 2. Fuzzy linguistic cost vector.

Literal terms Cheap High Very high Expensive


3.1. Numerical Example 1
Cost limit [a1, a2] [a2, a3] [a3, a4] [a4, a5]
Let us consider D ¼ 100 units, r ¼ 1.5, s ¼ 2.2, t ¼ .06, Membership range [0, w1] [w1, 1] [1, w2] [w2, 0]
setup cost c1 ¼ 150 ($), holding cost per unit item c2 ¼ 1.5
($), Shortage cost c3 ¼ 15 ($), m ¼ 3, selling price per unit
item p ¼ 20 ($), publicity cost k ¼ 4($), the cycle time
T ¼ 1 month, then we get the following results (Table 1). Table 3. Fuzzy linguistic demand and other parameters.

Literal terms Low Average Moderate High

4. Preliminaries Value limit [b1, b2] [b2, b3] [b3, b4] [b4, b5]
Membership range [0, u1] [u1, 1] [1, u2] [u2, 0]
4.1. Pentagon fuzzy number (PFN)
A fuzzy number of the form A~ ¼ ka1 ; a2 ; a3 ; a4 ; a5 l is called
a pentagon fuzzy number. Such fuzzy numbers arise when
the characteristics of several fuzzy parameters are viewed as
some semantic meanings of the linguistic words associated
with the trade itself. For this reason, we may re-construct
and re-define the cost vectors using some characteristic

Table 1. Crisp optimal solution.

q* S* t*1 days t*2 days R D0 Z*($)


134.073 12.589 27 3 134.986 125.858 254.94
Figure 2. Geometrical representation of PFN.
4 S.K. De and S.S. Sana
(
h da1 ; da2 ; da3 ; da4 ; da5 i if d $ 0 If we set w 1 ¼ 1 ¼ w 2, a2 ! a 3 ˆ a4 and
dA ¼ a1 ! a3 ˆ a5, then we have x0 ! ða3 þ a3 þ a3 Þ=3 !
h da5 ; da4 ; da3 ; da2 ; da1 i if d , 0:
a3 ; a crisp value.

8
m m m m m
>
> a1 ; a2 ; a3 ; a4 ; a5 if m.0
>

>
>
< am5 ; a4 ; a3 ; a2 ; a1 m,0
m m m m
if
A m ¼
m1 m2 m3 m4 m5
>
> a1 ; a2 ; a3 ; a4 ; a5 for 0 , m1 , m2 , m3 , m4 , m5
>
>
m1 m2 m3 m4 m5
>
: a5 ; a4 ; a3 ; a2 ; a1 for m1 , m2 , m3 , m4 , m5 , 0:

4.3. Centroid of a pentagon fuzzy number 4.4. Ranking index


From the geometry, we know that, if a closed region R 2 is If x is a fuzzy element (Chen, 1985), then its ranking index
formed by a variable point (x,y) where y is a function of x, can be obtained with the help of the center of gravity
then the centroid of the enclosed region is defined by x0 ; y0 of that fuzzy element in the following way:
x0 ; y0 and is given by qffiffiffiffiffiffiffiffiffiffiffiffiffiffiffiffiffiffiffiffiffiffiffi
 2ffi
ÐÐ IðxÞ ¼ ðx0 Þ þ y0 :
2
ð11Þ
x dx dy
x0 ¼ ÐÐR ð7Þ Now, the maximum index value occurs for a strong fuzzy
R dx dy
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number, otherwise it is a weak fuzzy number.


and
ÐÐ 4.5. Euclidean distance
y dx dy Let dmax ¼ Maxfx; x [ Domain ðA1 ; A2 ; . . . ; An21 ; An Þ},
y0 ¼ ÐÐR : ð8Þ
R dx dy where the Ai’s are fuzzy sets for i¼ 1,2, . . . , n. Now, the
distance between the two points x0 ; y0 and (dmax,0) is
Now, using (7) and (8), we get called the Euclidean distance and is denoted by

ÐÐ ÐÐ ÐÐ ÐÐ 
R1 þ R2 þ R3 þ R4 · · · x dx dy
x0 ¼ ÐÐ ÐÐ ÐÐ ÐÐ 
R1 þ R2 þ R3 þ R4 · · · dx dy
       
1 w1 2a22 2 a1 a2 2 a21 þ ð1 2 w1 Þ 2a23 2 a3 a2 2 a22 þ ð1 2 w2 Þ 2a24 2 a3 a4 2 a23 þ w2 a4 a5 þ a25 2 2a24
¼ ð9Þ
3 w1 ða2 2 a1 Þ þ ð1 2 w1 Þða3 2 a2 Þ þ ð1 2 w2 Þða4 2 a3 Þ þ w2 ða5 2 a4 Þ

and
ÐÐ ÐÐ ÐÐ ÐÐ 
R1 þ R2 þ R3 þ R4 · · · y dx dy
y0 ¼ ÐÐ ÐÐ ÐÐ ÐÐ 
R1 þ R2 þ R3 þ R4 · · · dx dy

1 w21 ða2 2 a1 Þ þ ð1 2 w1 Þð1 þ 2w1 Þða3 2 a2 Þ þ ð1 2 w2 Þð2 þ w2 Þða4 2 a3 Þ þ w22 ða5 2 a4 Þ


¼ : ð10Þ
3 w1 ða2 2 a1 Þ þ ð1 2 w1 Þða3 2 a2 Þ þ ð1 2 w2 Þða4 2 a3 Þ þ w2 ða5 2 a4 Þ

qffiffiffiffiffiffiffiffiffiffiffiffiffiffiffiffiffiffiffiffiffiffiffiffiffiffiffiffiffiffiffiffiffiffiffiffiffiffiffiffiffiffiffiffiffiffi
 2ffi
For more details, see Equations (A1) – (A12) in dðxÞ ¼ ðx0 2 dmax Þ2 þ y0 2 0 : ð12Þ
Appendix A. Here, minimizing the distance, we have the higher index
Particular cases of (9) and (10) are as follows. value which is generated from a strong fuzzy number
(membership degree greater than 0.5), otherwise it is a
(i) If we set w1 ¼ 1 ¼ w2 and a2 ! a3 ˆ a4, then weak fuzzy number.
x0 ! ða1 þ a3 þ a5 Þ=3 and y0 ! 1=3; which is the
case of a triangular fuzzy number.
(ii) If we set w1 ¼ 1 ¼ w2 and a2 – a3 – a4 , then we 4.6. Phi- (w -)coefficient
have Let X and Y be two genuinely dichotomous variables and
their corresponding scores be as shown in Table 4.
 
1 2a22 2 a21 þ a25 2 2a24 þ a4 a5 2 a1 a2 Therefore, the correlation coefficient between X and Y
x0 ! is given by the following formula:
3 a2 2 a1 þ a5 2 a4

and y0 ! 1=3; which are cases of trapezoidal fuzzy AD 2 BC


w ¼ pffiffiffiffiffiffiffiffiffiffiffiffiffiffiffiffiffiffiffiffiffiffiffiffiffiffiffiffiffiffiffiffiffiffiffiffiffiffiffiffiffiffiffiffiffiffiffiffiffiffiffiffiffiffiffiffiffiffiffiffiffiffi ð13Þ
numbers. ðA þ BÞðC þ DÞðB þ DÞðA þ CÞ
International Journal of Management Science and Engineering Management 5

Table 4. Score value of dichotomous variables. Now, using the fuzzy values (15) and arithmetic operations
(see Section 4.2), we have
X
~
9
Y Strong fuzziness Weak fuzziness Total A0 ¼ k 1 r m 1 ; k 2 r2 ; k 3 r3 ; k 4 r4 ; k 5 r5 ;
1 m2 m3 m4 m5 >
>
>
>
>
>
Strong fuzziness A B AþB ~
A1 ¼ hc11 ; c12 ; c13 ; c14 ; c15 i >
>
>
>
Weak fuzziness C D CþD
1 >
>
>
; >
~ r1 2t5 p5 1 r2 2t4 p4 1 r3 2t3 p3
Total AþC BþD A2 ¼ 2 c21 D1 e ; 2 c22 D2 e ; 2 c23 D3 e >
>
=
r4 2t2 p2 1 r5 2t1 p51
1
c 24 D 4 e ; c 25 D5 e i
5. Fuzzy mathematical model 2 2 >
>
~
1 >
>
From the crisp model (1), it is obvious that, except for A3 ¼ 2 c31 D1 e r1 2t5 p5 þðr1 2s5 Þt2 1
; 2 c32 D2 e r2 2t4 p4 þðr2 2s4 Þt2 ; >>
>
>
>
t1andt2, the other parameters are constant. To cope with r3 2t3 p3 þðr3 2s3 Þt2 1 r4 2t2 p2 þðr4 2s2 Þt2 > >
1
c
2 33 3 D e ; c
2 34 4 D e ; >
>
real-world situations, we consider the key parameters as >
>
1 r5 2t1 p1 þðr5 2s1 Þt2
i: >
;
pentagon fuzzy numbers. Then, the fuzzified form of (1) 2 c35 D5 e
can be written as follows: ð17Þ
,
~ r~2tp ðT 2 t2 Þ
c~1 c~2 De 2
Therefore, using (17), the fuzzy objective function (14)
Minimize Z~ ¼ þ
T 2T may be written as
~ r~ð1þt2 Þ2tp~ 2s~t2 t22
c3~ De ~
þ þ k~ r~ m ð14Þ Z ¼ hZ 1 ; Z 2 ; Z 3 ; Z 4 ; Z 5 i;
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2T
where
2 t2
3
£ ðT2t 1Þ
2
r 1 2 t5 p 5
Z 1 ¼ k 1 rm
1 þ T c11 þ 2 c21 D1 e
1 1 1
þ 12 c31 D1 e r1 2t5 p5 þðr1 2s5 Þt2 £ T2
6 T
7
6 ðT2t1 Þ2 t22 7
6 Z 2 ¼ k 2 rm 2
þ 1
c þ 1
c D e r 2 2 t4 p 4
£ þ 1
c D e r2 2t4 p4 þðr2 2s4 Þt2
£ 7
6 2 T 12 2 22 2 T 2 32 2 T 7
6 7
6 Z ¼ k rm3 þ 1 c þ 1 c D e r3 2t3 p3 £ ðT2t1 Þ2 þ 1 c D e r3 2t3 p3 þðr3 2s3 Þt2 £ t22 7
6 3 3 3 T 13 2 23 3 2 33 3 T 7 ð18Þ
6 T
7
6 ðT2t1 Þ2 t22 7
6 Z 4 ¼ k 4 rm 4
þ 1
c þ 1
c D e r 4 2 t2 p 2
£ þ 1
c D e r4 2t2 p2 þðr4 2s2 Þt2
£ 7
6 4 T 14 2 24 4 T 2 34 4 T 7
4 t22
5
r5 2t1 p1 ðT2t1 Þ2 r5 2t1 p1 þðr5 2s1 Þt2
Z 5 ¼ k 5 rm
5
5
þ 1
T c 15 þ 1
2 c 25 D 5 e £ T þ 1
2 c 35 D 5 e £ T :

,
subject to the constraints 0 , r , s and 0 # t2 # T, Now, using (9) and (10), the centroid of Z is given
where the PFN vector components are given by c~1 ¼ kc11 ; by
       
1 w1 2Z 22 2 Z 1 Z 2 2 Z 21 þ ð1 2 w1 Þ 2Z 23 2 Z 3 Z 2 2 Z 22 þ ð1 2 w2 Þ 2Z 24 2 Z 3 Z 4 2 Z 23 þ w2 Z 4 Z 5 þ Z 25 2 2Z 24
x0 ¼
3 w1 ðZ 2 2 Z 1 Þ þ ð1 2 w1 ÞðZ 3 2 Z 2 Þ þ ð1 2 w2 ÞðZ 4 2 Z 3 Þ þ w2 ðZ 5 2 Z 4 Þ
ð19Þ

,
c12 ;c13 ;c14 ;c15 l; c2 ¼ kc21 ;c22 ;c23 ;c24 ;c25 l; c~ 3 ¼ kc31 ;c32 ; and
~ ¼ kD1 ;D2 ;D3 ;D4 ;D5 l; r~ ¼ kr1 ; r2 ; r3 ; r4 ; r5 l;
c33 ;c34 ;c35 l; D

1 w21 ðZ 2 2 Z 1 Þ þ ð1 2 w1 Þð1 þ 2w1 ÞðZ 3 2 Z 2 Þ þ ð1 2 w2 Þð2 þ w2 ÞðZ 4 2 Z 3 Þ þ w22 ðZ 5 2 Z 4 Þ


y0 ¼ : ð20Þ
3 w1 ðZ 2 2 Z 1 Þ þ ð1 2 w1 ÞðZ 3 2 Z 2 Þ þ ð1 2 w2 ÞðZ 4 2 Z 3 Þ þ w2 ðZ 5 2 Z 4 Þ

t~ ¼ kt1 ; t2 ; t3 ; t4 ; t5 ;l ks~ ¼ s1 ; s2 ; s3 ; s4 ; s5 l; km
~ ¼ m1 ;m2 ; 5.1. Cases of optimality
m3 ;m4 ;m5 l; p~ ¼ kp1 ;p2 ;p3 ;p4 ;p5 l, and k~ ¼ kk1 ;k2 ;k3 ;k4 ;k5 l: For optimality, the following cases arise
Let us rewrite (14) as follows:
~ ~ ~ ~ ~
MinZ ¼ A0 þ A1 F 1 þ A2 F 2 þ A3 F 3 ; ð15Þ (i) The objective function is strong fuzzy for ranking
index [Max I ðZ Þ].
where (ii) The objective function is weak fuzzy for ranking
9 index[Min I(Z)].
F 1 ¼ T1 ; F 2 ¼ ðT2t 2Þ
2
; F 3 ¼ T2 ;
t2 >
>
T >
= (iii) The objective function is strong fuzzy for
A0 ¼ kr m ; A1 ¼ c1 ; A2 ¼ 12 c2 Der2tp ; ð16Þ Euclidean distance [Min d(Z)].
>
> (iv) The objective function is weak fuzzy for
A3 ¼ 1 r2tpþðr2sÞt2
: >
;
2 c3 De Euclidean distance [Max d(Z)].
6 S.K. De and S.S. Sana

Now, Using (9) and (10), the ranking index and Euclidean distortion cannot be avoided. Given this situation, a
distance of the order and shortage quantities are decision maker will always have to be prepared and
8 qffiffiffiffiffiffiffiffiffiffiffiffiffiffiffiffiffiffiffiffiffiffiffiffi
2  2ffi
capable of handling all possible eventualities, whether for
>
> * ¼ IðqÞ ¼
q þ yq
< q x better or worse. For this reason, whenever we talk about
qffiffiffiffiffiffiffiffiffiffiffiffiffiffiffiffiffiffiffiffiffiffiffi
 2ffi ð21Þ the cost of an item, possible associations/ideas will arise
>
> like kCheap; High; Veryhigh; Expensivel. A decision
: S ¼ IðSÞ ¼ ðxS Þ þ yS
* 2
maker (DM) will then decide and make an estimation of
the inventory cost under the possible considerations of the
and declarations of the ordering statements. Finally, he/she
8 qffiffiffiffiffiffiffiffiffiffiffiffiffiffiffiffiffiffiffiffiffiffiffiffiffiffiffiffiffiffiffiffiffiffiffiffiffiffiffi
>  2  2 will have to decide the ‘best membership grade’ of fuzzy
>
< q * ¼ dðqÞ ¼ xq 2 dqmax þ yq parameters when the cost of the commodities are cheap,
qffiffiffiffiffiffiffiffiffiffiffiffiffiffiffiffiffiffiffiffiffiffiffiffiffiffiffiffiffiffiffiffiffiffiffiffiffiffiffiffi
 2  2 ð22Þ high, very high and out of control in the supermarket.
>
> * ¼ dðSÞ ¼
: S xS 2 dSmax þ yS ; Similarly, the fuzzy linguistic associations of the demand
rate and other parameters are kLow; Average;
where Moderate; Highl. All these associations are based on
       
1 u1 2q22 2 q1 q2 2 q21 þ ð1 2 u1 Þ 2q23 2 q3 q2 2 q22 þ ð1 2 u2 Þ 2q24 2 q3 q4 2 q23 þ u2 q4 q5 þ q25 2 2q24
xq ¼ ð23Þ
3 u1 ðq2 2 q1 Þ þ ð1 2 u1 Þðq3 2 q2 Þ þ ð1 2 u2 Þðq4 2 q3 Þ þ u2 ðq5 2 q4 Þ
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1 u21 ðq2 2 q1 Þ þ ð1 2 u1 Þð1 þ 2u1 Þðq3 2 q2 Þ þ ð1 2 u2 Þð2 þ u2 Þðq4 2 q3 Þ þ u22 ðq5 2 q4 Þ


yq ¼ ð24Þ
3 u1 ðq2 2 q1 Þ þ ð1 2 u1 Þðq3 2 q2 Þ þ ð1 2 u2 Þðq4 2 q3 Þ þ u2 ðq5 2 q4 Þ

       
1 u1 2S22 2 S1 S2 2 S21 þ ð1 2 u1 Þ 2S23 2 S3 S2 2 S22 þ ð1 2 u2 Þ 2S24 2 S3 S4 2 S23 þ u2 S4 S5 þ S25 2 2S24
xS ¼ ð25Þ
3 u1 ðS2 2 S1 Þ þ ð1 2 u1 ÞðS3 2 S2 Þ þ ð1 2 u2 ÞðS4 2 S3 Þ þ u2 ðS5 2 S4 Þ

1 u21 ðS2 2 S1 Þ þ ð1 2 u1 Þð1 þ 2u1 ÞðZ 3 2 Z 2 Þ þ ð1 2 u2 Þð2 þ u2 ÞðS4 2 S3 Þ þ u22 ðS5 2 S4 Þ


yS ¼ ð26Þ
3 u1 ðS2 2 S1 Þ þ ð1 2 u1 ÞðS3 2 S2 Þ þ ð1 2 u2 ÞðS4 2 S3 Þ þ u2 ðS5 2 S4 Þ

and
2 3
D1 t2 er1 ð1þt2 Þ2t5 p5 2s5 t2 D1 t2 er1 2t5 p5 ft1 þ t2 e2ðr1 2s5 Þt2 }
6 7
" #T 6 D2 t2 er2 ð1þt2 Þ2t4 p4 2s4 t2 D1 t2 er2 2t4 p4 ft1 þ t2 e2ðr2 2s4 Þt2 } 7
S1 ; S2 ; S3 ; S4 ; S5 6 7
6 7
¼6 D t er3 ð1þt2 Þ2t3 p3 2s3 t2 D1 t2 er3 2t3 p3 ft1 þ t2 e2ðr3 2s3 Þt2 } 7 ð27Þ
q1 ; q2 ; q3 ; q4 ; q5 ; 6 32 7
6 7
6 D4 t2 er4 ð1þt2 Þ2t2 p2 2s2 t2 D1 t2 er4 2t2 p2 ft1 þ t2 e2ðr4 2s2 Þt2 } 7
4 5
D5 t2 er5 ð1þt2 Þ2t1 p1 2s1 t2 D1 t2 er5 2t1 p1 ft1 þ t2 e2ðr5 2s1 Þt2 }

5.2. Implications of introducing PFN proper market surveys and membership grades that are to
In global trading system, a universal language is used be designed according to the analysis of the collected data
throughout the world. But companies from different with proper norms. Hence, PFN has an emergent
regions of the world have different local/regional application in current applied inventory problems.
languages. Some companies usually prefer to interact
with other companies using their own regional language.
So, to perform/order items, a language translation is
essential. Since each and every language has its own 5.3. Numerical Example 2
limitations regarding translating the main sense/import of Let the initial assumptions be c1~ ¼ k110; 135;
a statement properly, so there will always be a chance of 150; 160; 170l, c~2 ¼ k0:6; 1:1; 1:5; 2; 2:5l, c~3 ¼ k11; 13;
the meaning of words being distorted. Such kinds of 15; 17; 24l, D~ ¼ k100; 105; 110; 125; 130l, r~ ¼ k1; 1:2;
International Journal of Management Science and Engineering Management 7

Table 5. The general solution of the fuzzy model.

Case I(q) I(S) Z* Cases d(q) dðSÞ Z*


(i) Max IðZÞ 476.146 353.866 298.02 (iii) Min dðZÞ 182.912 97.074 163.85
(ii) Min IðZÞ 182.912 97.074 164.36 (iv) Max dðZÞ 346.146 223.866 297.74

1:5; 1:8; 2:2, t~ ¼ k0:02; 0:04; 0:06; 0:08; 0:1l, s~ ¼ k1; 1:4; opening and closing time durations, a negligible sensitivity
1:7; 2:2; 3l, m ~ ¼ k2:2; 2:6; 3; 3:4; 3:6l, p~ ¼ k14:5; 16:8; occurs in the cases of c3 and s, in which c3 is
20:5; 24:2; 26:5l, k~ ¼ k2:5; 3; 5; 8; 11l, w1 ¼ 0.85, w2 ¼ unidirectional and the other is of the opposite direction.
0.65, u1 ¼ 0.95 and u2 ¼ 0.65. Then, we have dZmax ¼ 170, Also, c2 has average sensitivity while r has moderate
dqmax ¼ dSmax ¼ 130 and get the results shown in Table 5. sensitivity and it has no feasible solution for the þ 50%
Here, we have obtained t1 ¼ 12 days, t2 ¼ 18 days for
* *
change. Throughout the whole table, one may observe that
strong fuzziness and t1 ¼ 27:5 days, t2 ¼ 2:5 days for weak the minimum cost attains $174. 46 for the þ 50% change
* *

fuzziness. The phi-coefficients are provided in Tables 6– 8. of T, providing an order quantity of 134.073 units and a
Then, the correlation coefficient between I(Z) and d(Z) shortage quantity of 12.579 units, with less than three days
is obtained with the help of (13) as w ¼ 0.289. shortage duration in a month. This reveals that the average
optimum cost increases as the time horizon duration
increases. Moreover, the maximum cost attains $496.39
6. Sensitivity analysis for the 2 50% change in the parameter T. We know that
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Let us change each of the parameters fuzzy optimization generally provides us a better result
fc1 ; c2 ; c3 ; d; k; r; t; p; s; m; T} from 2 50 to þ 50% to than the crisp result. This is why we have gone through the
study on the optimal solution for the crisp model. solution space under the strong and weak fuzzy numbers.

7. Comments on sensitivity analysis 8. Conclusion


From Table 9 we see that, within a month, opening time In this paper, we have developed a solution procedure for a
27 days and closing time 3 days occur only when the backorder EOQ model having shortage time dependent
parameters {c1, d, k, t, p, m, T} are being changed from demand rate when the coefficient vectors are pentagon
2 50 to þ 50%. The parameters m and k are less sensitive fuzzy numbers. Earlier researchers have usually used
in respect of cost reduction. The parameters c1 and d are parabolic, triangular or trapezoidal fuzzy numbers to
moderately sensitive. On the other hand, opposite fuzzify their models. In our present study, we have extended
directional changes are observed in the parameters t, p the model to pentagon fuzzy numbers beyond these
and T in which T is highly sensitive and the other two have assumptions. These kinds of consideration have great
average sensitivity. However, for the cases of fluctuating practical implications in modern applied research on
inventory management. Regarding the solution, we usually
see that most researchers have tried to make a decision
Table 6. Computation of the phi-coefficient. about the output of the numerical results of the objective
Strong fuzziness Weak fuzziness Total function. This decision may not be supported by the attitude
of the decision maker (DM). So the basic intention behind
I(Z) 298.02 (A) 164.36 (B) 462.38 (A þ B) any kind of decision variable is very important. In a
d(Z) 163.85 (C) 297.74 (D) 461.59 (C þ D)
backorder inventory model, the basic intention is to reduce
Total 461.87 (A þ C) 462.10 (B þ D)
the amount of shortage quantity with respect to reordering
the considerable amount of items in stock. That is, in a
Table 7. Computation of the phi-coefficient for I(Z). linguistic (behavioral) fuzzy environment, the relationship
between order quantity and shortage quantity would be
Strong fuzziness Weak fuzziness Total
such that their correlation coefficient is negative. However,
q 476.146(A) 182.912 (B) 659.058(A þ B) in many cases this has not been tested by the researchers.
S 353.866 (C) 97.074 (D) 450.94(C þ D) For data handling, several methods are available in the
Total 830.012 (A þ C) 279.986 (B þ D) literature, but the choice is in general ambiguous because of
Note: The phi-coefficient between q and S is w ¼ 20.0403. the following questions.

Table 8. Computation of the phi-coefficient for d(Z). (a) What data are acceptable?
(b) Which method is correct and why?
Strong fuzziness Weak fuzziness Total
(c) What should we have to do to select the best reliable
q 182.912 (A) 346.146 (B) 659.058 (A þ B) data?
S 97.074 (C) 223.866 (D) 320.94 (C þ D)
Total 279.986 (A þ C) 570.012 (B þ D) We cannot answer these questions unless we genuinely
Note: Here, the phi-coefficient between q and S is w ¼ þ 0.0446. analyze the dichotomous fuzzy variables (strong – weak)
8 S.K. De and S.S. Sana

Table 9. Crisp optimal solution.

Parameter Change (%) q* S* t*1 days t*2 days Z * ($) (Z* 2 Z*)/Z*100%
c1 þ 50 134.073 12.589 27 3 329.94 þ29.42
þ 30 134.073 12.589 299.94 þ17.65
2 30 134.073 12.589 209.94 2 17.65
2 50 134.073 12.589 179.94 2 29.42
d þ 50 201.109 18.884 27 3 300.67 þ17.94
þ 30 174.295 16.366 282.38 þ10.76
2 30 93.851 8.812 227.51 2 10.76
2 50 67.036 6.295 209.22 2 17.93
t þ 50 73.581 6.909 27 3 213.69 2 16.18
þ 30 93.539 8.783 227.30 2 10.84
2 30 192.171 18.044 294.57 þ15.54
2 50 244.297 22.939 330.12 þ29.49
p þ 50 73.581 6.909 27 3 213.69 2 16.18
þ 30 93.539 8.783 227.30 2 10.84
2 30 192.171 18.044 294.57 þ15.54
2 50 244.297 22.939 330.12 þ29.49
k þ 50 134.073 12.589 27 3 261.69 þ2.65
þ 30 134.073 12.589 258.99 þ1.59
2 30 134.073 12.589 250.89 21.59
2 50 134.073 12.589 248.19 22.65
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m þ 50 134.073 12.589 27 3 266.25 þ4.44


þ 30 134.073 12.589 260.89 þ2.33
2 30 134.073 12.589 250.82 21.62
2 50 134.073 12.589 248.79 22.41
T þ 50 134.073 12.589 27 3 174.46 2 31.56
þ 30 134.073 12.589 199.23 2 21.85
2 30 134.073 12.589 358.42 þ40.59
2 50 134.073 12.589 496.39 þ94.71
c2 þ 50 132.982 18.172 25.5 4.5 293.73 þ15.22
þ 30 133.465 15.997 26.1 3.9 278.74 þ9.33
2 30 134.533 9.008 28 2 229.52 29.97
2 50 134.753 6.526 28.5 1.5 211.63 2 16.99
c3 þ 50 134.575 8.599 28 2 258.13 þ1.25
þ 30 134.440 9.849 27.7 2.3 257.14 þ0.86
2 30 133.161 17.404 25.7 4.3 250.97 21.56
2 50 131.528 23.265 24 6 245.89 23.55
s þ 50 131.685 13.312 26.3 3.7 253.64 20.51
þ 30 132.853 12.975 26.6 3.4 254.24 20.27
2 30 134.941 12.288 27.3 2.7 255.51 þ0.22
2 50 135.399 12.118 27.4 2.6 255.82 þ0.35
r þ 50 – – – – – –
þ 30 211.239 19.411 27.2 2.8 323.69 þ26.97
2 30 84.992 8.187 26.7 3.3 212.64 2 16.59
2 50 62.657 6.159 26.6 3.4 194.50 2 23.71

with respect to the methods (ranking index, Euclidean (I) the degree of correlation for applicability of the
distance). Here, we have investigated the crisp model, using ranking index I(Z) and the Euclidean distance d
strong and weak fuzzy cases of the ranking index method (Z) methods in a fuzzy environment is poor
and Euclidean distance method, respectively. Then, (0.089),
considering the general intention of the DM, we have (II) the correlation between order quantities q and
tabulated a dichotomous data set (see Tables 6 – 8). We have shortage quantities S from I(Z) is 2 0.0403,
calculated the phi-coefficients for strong fuzziness and (III) the correlation between order quantities q and
weak fuzziness, respectively, in the following cases: shortage quantities S from d(Z) is þ 0.0446.

(i) the ranking index I(Z) and Euclidean distance d(Z) Since case II provides negative correlation between q and S,
of the objective function, the best method is the ranking index method. Moreover, the
(ii) the order quantities and shortage quantities from I best result can be obtained from weak fuzzy numbers. That
(Z), is Minimize Z ¼ $164.36 at q * ¼ 182.912 and
(iii) the order quantities and shortage quantities under d S* ¼ 97.074. Finally, we may conclude with a few words:
(Z), any linguistic output from a decision maker may convey
some vague information that cannot be avoided in a
and we have observed that managerial system. To handle such situations, fuzzy sets
International Journal of Management Science and Engineering Management 9

play an important role and, of course, phi-coefficients are an Chu, T., & Tsao, C. (2002). Ranking fuzzy numbers with an area
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International Journal of Management Science and Engineering Management 11

Appendix A
We shall discuss the following integrals one by one.
Case 1: For region R1, x varies from a1i to a2i and y varies from 0 to w1(x 2 a1i)/(a2i – a1i). The integral values are
8   9
>
> x2a
w1i a – a1i >
>
ðð >
að2i > ð >
> að2i
< =
2i 1i

x 2 a1i w1i
dx dy ¼ dy dx ¼ w1i dx ¼ ða2i – a1i Þ; ðA1Þ
>
> >
> a2i – a1i 2
a1i > >
R1
>
: 0 >
; a1i

8   9
>
> x2a
w1i a – a1i >
>
ðð að2i >
> ð >
> að2i
< =
2i 1i

x 2 a1i w1i  2 
x dx dy ¼ x dy dx ¼ xw1i dx ¼ 2a2i 2 a1i a2i 2 a21i ðA2Þ
>
> >
> a2i – a1i 6
R1 >
> >
>
a1i
: 0 ; a1i

and
8   9
>
> x2a
w1i a – a1i >
>
ðð að2i >
> ð >
> að2i
< =
2i 1i

1 x 2 a1i 2 w2
y dx dy ¼ ydy dx ¼ w21i dx ¼ 1i ða2i – a1i Þ: ðA3Þ
Downloaded by [117.205.164.40] at 03:49 22 January 2015

>
> >
> 2 a2i – a1i 6
R1 >
> >
>
a1i : 0 ; a1i

Case II: For region R2, x varies from a2i to a3i and y varies from w1i to w1i þ (1 2 w1i)(x 2 a2i)/(a3i – a2i). The integral values are
8   9
>
> x2a
w1i þð12w1i Þ a – a2i >
>
ðð að3i >
> ð >
> að3i
< =
3i 2i

x 2 a1i ð1 2 w1i Þ
dx dy ¼ dy dx ¼ ð1 2 w1i Þ dx ¼ ða3i – a2i Þ; ðA4Þ
>
> >
> a2i – a1i 2
R2 >
> >
>
a2i
: w1i
; a2i

8   9
>
> x2a
w1i þð12w1i Þ a – a2i >
>
ðð >
að3i > ð 3i 2i >
> að3i
< = x 2 a2i ð1 2 w1i Þ  2 
x dx dy ¼ x dy dx ¼ xð1 2 w1i Þ dx ¼ 2a3i 2 a2i a3i 2 a22i ðA5Þ
>
> >
> a3i – a2i 6
a2i > >
R2
>
: w1i >
; a2i

and
8   9
>
> x2a
w1i þð12w1i Þ a – a2i >
>
ðð >
að3i > ð 3i 2i >
>
< =
y dx dy ¼ ydy dx
>
> >
>
R2 >
> >
>
a2i
: w1i
; ðA6Þ
að3i " 2 #
1 2 x 2 a2i x 2 a2i ð1 2 w1i Þð1 þ 2w1i Þða3i – a2i Þ
¼ ð1 2 w1i Þ þ2w1i ð1 2 w1i Þ dx ¼ :
2 a3i – a2i a3i – a2i 6
a2i

Case III: For region R3, x varies from a3i to a4i, y varies from 1 to w2i þ (1 2 w2i)(a4i 2 x)/(a4i – a3i), and
8   9
>
> a 2x
w2i þð12w2i Þ a 4i– a >
>
ðð >
að4i > ð 4i 3i >
>
< =
dx dy ¼ dy dx
>
> >
>
R3 >
> >
>
a3i : 1 ;

að4i  
a4i 2 x ð1 2 w2i Þ ð1 2 w2i Þ
¼ 2ð1 2 w2i Þ þ ð1 2 w2i Þ dx ¼ 2 ða4i – a3i ~Þ ða4i – a3i Þ; ðA7Þ
a4i – a3i 2 2
a3i

(we take positive value)


12 S.K. De and S.S. Sana
8   9
>
> a 2x
w2i þð12w2i Þ a 4i– a >
>
ðð >
að4i > ð >
>
< =
4i 3i

x dx dy ¼ x dy dx
>
> >
>
a3i > >
R3
>
: 1 >
;

að4i  
a4i 2 x ð1 2 w2i Þ  2  ð1 2 w2i Þ  2 
¼ x 2ð1 2 w2i Þ þ ð1 2 w2i Þ dx ¼2 2a4i 2 a23i~ 2 a3i a4i 2a4i 2 a23i 2 a3i a4i ðA8Þ
a4i – a3i 6 6
a3i

(we take positive value) and


8   9
>
> a 2x
w2i þð12w2i Þ a 4i– a >
>
ðð að4i >
> ð >
> að3i " 2 #
< =
4i 3i

1   a4i 2 x a4i 2 x
y dx dy ¼ ydy dx ¼ 2 12 w22i þ ð1 2 w2i Þ
2
þ2w2i ð1 2 w2i Þ dx
>
> >
> 2 a4i – a3i a4i – a3i
R3 >
> >
> ðA9Þ
a3i
: 1 ; a2i

ð1 2 w2i Þð2 þ~ w2i Þða4i – a3i Þ ð1 2 w2i Þð2 þ w2i Þða4i – a3i Þ
¼2
6 6
(we take positive value).
Downloaded by [117.205.164.40] at 03:49 22 January 2015

Case IV: For region R4, x varies from a4i to a5i, y varies from w2i(a5i 2 x)/(a5i – a4i) to 0 and
8 9
>
> >
>
ðð >
að5i > ð0 >
> að5i  
< = a5i 2 x w2i w2i
dxdy ¼ dy dx ¼ 2 w2i dx ¼ 2 ða5i – a4i ~Þ ða5i – a4i Þ ðA10Þ
>
>   >> a – a 2 2
a4i > >
R4 5i 4i
>
:w2i 5i
a 2x >
; a4i
a5i – a4i

(we take positive value),


8 9
>
> >
>
ðð ð < >
> ð >
>  að5i 
a 5i 0
= a5i 2 x w2i  2  w2i  2 
xdxdy ¼ x dy dx ¼ 2 x w2i dx ¼2 a þ a5i a~ 4i 2 2a24i a5i þ a5i a4i 2 2a24i ðA11Þ
>
>   >> a5i – a4i 6 5i 6
a4i > >
R4
>
:w2i a5i 2x >
; a4i
a5i – a4i

(we take positive value) and


8 9
>
> >
>
ðð að5i >
> >
> ð0 að5i " 2 #
< = 1 2 a5i 2 x w22i w2
ydxdy ¼ ydy dx ¼ 2 w2i dx ¼2 ða5i – a4i ~Þ 2i ða5i – a4i Þ ðA12Þ
>
>   >
> 2 a5i – a4i 6 6
a4i > >
R4
>
: w2i a5i 2x >
; a 4i
a5i – a4i

(we take positive value).

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