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1 Introduction
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371
Fuzzy single-period
Fuzzy parameters Solution method
inventory model
Ishii and Konno [6] Shortage cost Fuzzy max (min) order
1. Demand
Petrovic et al. [7] 2.Demand, holding cost Arithmetic defuzzification
and shortage cost
1.Holding cost and short-
Fuzzy rank ordering by total integral
Li et al. [8] age cost
value
2. Demand
Kao and Hsu [9] Demand Ranking fuzzy numbers
Graded mean integration
Dutta et al. [10] Demand
representation
Ordering of fuzzy numbers with respect
Dutta et al. [11] Demand
to their possibilistic mean values
Hybrid intelligent algorithm based on
Ji and Shau [12] Demand
fuzzy simulation
Hybrid intelligent algorithm based on
Shau and Ji [13] Demand
fuzzy simulation
Lu [14] Demand Centroid defuzzification
Ordering of fuzzy numbers with respect
Xu and Zhai [15] Demand
to their possibilistic mean values
TABLE 1
Summary of fuzzy single-period inventory control models.
Single-Period Inventory Models 373
[TC (Q; X)] will be as follows, where Q represents order quantity and X stands
for the demand;
where px(x0) is the probability that the demand X is equal to the value x0.
Let
c p (Q + 1) + x
Q
ch (Q + 1 - x0 ) pX ( x0 )
0 =0
+ x cs ( x0 - Q -1) pX ( x0 ) - [c pQ
0 =Q +1
Q -1
+ x ch (Q - x0 ) pX ( x0 )
0 =0
(6)
+ x cs ( x0 - Q) pX ( x0 )] 0
0 =Q
cp + x ch pX ( x0 ) - x
Q
cs p X ( x 0 ) 0
0 =0 0 =Q +1
cs - c p
pX (Q)
ch + cs
Demand Probability
1,000 0
2,000 0.0625
3,000 0.125
4,000 0.1875
5,000 0.25
6,000 0.1875
7,000 0.125
8,000 0.0625
9,000 0
TABLE 2
Probability distribution of demand.
The fuzzy set theory provides a proper framework for description of uncer-
tainty related to vagueness of natural language expressions and judgments. In
this section, firstly preliminary definitions about fuzzy modeling are pre-
sented and then three different fuzzy single-period inventory control models
are developed and the solutions of the models are compared with each other.
3.1 Preliminaries
In this section, some introductory definitions of the fuzzy set theory are pre-
sented. Our models are based on these definitions.
Definition 1: Fuzzy Sets [4] Let X be a classical set of objects, called the
universe, whose generic elements are denoted by x. Membership in a classical
subset A of X is often viewed as a characteristic function, A from X to {0,1}
such that
376 H. Behret et al.
1 iff x A
A ( x ) = (7)
0 iff x A
By conditions (I) and (II), each a-cut is a compact and convex subset of
R hence it is a closed interval in R, Aa=[AL (a); AR (a)]. If h=1 we say that
the fuzzy number is normal.
For example, the fuzzy number is a triangular fuzzy number =
(a1; a2; a3), a1a2 a3 if its membership function (x): R[0,1] is equal to
as follows;
0 x a1
x - a1
a1 < x a2
a2 - a1
( x ) = (9)
a - x
3 a2 < x a3
a3 - a2
0 x > a3
FIGURE 1.
(a) symmetrical and (b) non-symmetrical triangular membership functions.
I. () = 0; ( X ) = 1;
II. For any collection {Ai} of subsets of X, (iAi)=supi ((Ai)).
A, ( A) = supx A ( x ) (10)
Definition 4: Level-k fuzzy set [17] The term level-2 fuzzy set indicates
fuzzy sets whose elements are fuzzy sets (See Figures 2.(a) and 2.(b)). The
term level-1 fuzzy set is applicable to fuzzy sets whose elements are (no
fuzzy sets) ordinary elements. In the same way, we can derive up to level-k
fuzzy set.
C(Z )
. z . dz
C(Z )
.z
FIGURE 2.
(a) level-2 fuzzy set, (b) elements of level-2 fuzzy set A1, A2 and A3
Definition 6: S-fuzzification [19] Let be a level-2 fuzzy set and let takes
fuzzy values C i ( x ), x X , i = 1, 2,, n with the possibility (i). can be
transformed into ordinary set s - fuzz() using the s-fuzzification;
FIGURE 3.
Centroid defuzzification method
~(xi)=UC
OC ~(xi)=X~(xi)
(15)
~+UC
OC ~(xi)=maxxi X~{X~(xi)}, i=0,1,2, , n
The expected value of fuzzy total cost in the discrete case is;
E [TC (Q; X )] = c pQ + defuzz(OC + UC )
n
[(OC ( xi ) + UC ( xi ))* OC
xi = 0
( xi )]
+UC (16)
E [TC (Q; X )] = c pQ + n
[OC
xi = 0
( xi )]
+UC
Here, the operator defuzz denotes the centroid method for defuzzifica-
tion, (see Section 3.1). Best order quantity (Q*) which minimizes the fuzzy
total cost is found by marginal analysis. The best (Q*) will be the lowest Q
where E [TC (Q; X )] is greater than zero. Therefore, we select the smallest
Q from the set {x0;x1;x2;;xn} for which,
E [TC (Q; X )] > 0 (17)
Let the unit inventory costs are considered as precise, cp=$4, ch=$3
and cs=$6. The demand is a triangular fuzzy number X given by domain
X ={1,000; 2,000; 3,000; ,; 9,000}and have a discrete membership func-
tion X~(xi) as follows;
380 H. Behret et al.
0 xi 1, 000
xi -1, 000
4, 000 1, 000 < xi 5, 000
X ( xi ) =
(18)
9, 000 - xi 5, 000 < xi 9, 000
4, 000
0 xi > 9, 000
OC
( xi ) = ch ( xi ) = cs (19)
UC
OC + UC 0 3,000 6,000 9,000 12,000 18,000 24,000 30,000
~+UC~
OC 0.75 0.5 1 0 0.75 0.5 0.25 0
TABLE 3
Possibility distribution of ( OC + UC ).
Single-Period Inventory Models 381
Here, as in Section 3.2 best order quantity (Q*) which minimizes the
fuzzy total cost is found by marginal analysis.
Consider that the demand of a product has the probability distribution rep-
resented in Table 2 and the inventory costs such as holding and shortage cost are
considered as imprecise and represented by triangular fuzzy numbers, c~ h =$
(2;3;4) and c~s =$ (2;3;4), respectively. Items are produced for a single-period at
the cost of c p=$4. As an example, let us order a quantity of 4,000 units
(Q=4,000). For x2=2,000, OC=$(2;3;4) * 2,000=$(4000;6000;8000) and
UC =$(5;6;7) * 0=$0. The probability of the demand X is equal to the value
2,000 is px(2,000)=0.0625. The addition of the defuzzified values is; defuzz
(OC (2,000) * px(2,000))+defuzz (UC (2,000) * px(2,000))=375. The defuzzi-
fied values for other demand parameters are found by the same way. From
Equation (20), the expected value of fuzzy total cost is obtained as E[ TC (4,000;
X )] =$24,250. The same procedure is applied for all order quantities to find
the best order quantity (Q*) which minimizes the expected value of fuzzy
total cost.
E [TC (Q; X )] = c p * Q + defuzz(s - fuzz( PC )) (24)
x1 x2 x3 x4 x5 x6 x7 x8 x9
~
X 1,000 2,000 3,000 4,000 5,000 6,000 7,000 8,000 9,000
X~(xi) 0 0.25 0.5 0.75 1 0.75 0.5 0.25 0
(6,000; (4,000; (2,000;
OC 9,000; 6,000; 3,000; (0; 0; 0) (0; 0; 0) (0; 0; 0) (0; 0; 0) (0; 0; 0) (0; 0; 0)
12,000) 8,000) 4,000)
(5,000; (10,000; (15,000; (20,000; (25,000;
UC (0; 0; 0) (0; 0; 0) (0; 0; 0) (0; 0; 0) 6,000; 12,000; 18,000; 24,000; 30,000;
7,000) 14,000) 21,000) 28,000) 35,000)
(6,000; (4,000; (2,000; (5,000; (10,000; (15,000; (20,000; (25,000;
PC 9,000; 6,000; 3,000; (0; 0; 0) 6,000; 12,000; 18,000; 24,000; 30,000;
12,000) 8,000) 4,000) 7,000) 14,000) 21,000) 28,000) 35,000)
TABLE 4
Unit penalty cost values for Q=2,000.
Single-Period Inventory Models 383
FIGURE 4
(a) level-2 fuzzy set (PC ), (b) s - fuzz(PC )
FIGURE 5
Centroid defuzzification of s - fuzz(PC ).
In this section, we experiment the models for all order quantities under
given parameters in the previous sections and compare the results with
eachother to have a better understanding of the difference between crisp and
fuzzy models. In these experiments, for all of the models, we consider that
items are produced for a single-period at the cost of cp=$4. For the models I
and II, the crisp values of holding and shortage costs are considered as
c~h =$3 and c~s =$6. For the models I and III, the demand has the probability
distribution represented in table 2. In the models III and IV, inventory costs
are imprecise and represented by triangular fuzzy numbers, c~h =$(2;3;4) and
c~
s =$(5;6;7). Additionally, in the models II and IV, the demand is given by
domain X = {1,000; 2,000; 3,000; ; 9,000} and has a discerete triangular
membership function X~(xi) as in Equation (18). The comparison of the
results of experimented models for the given parameters are presented
in Table 5.
The minimum total cost values for the models are found by marginal anal-
ysis. The order quantities corresponding to the minimum total cost values are
the best order quantities (Q*) for the related model. When we analyze the
results of the models, we observe that the results of model-I and model-III are
the same for all order quantities. In model-III, we consider stochastic demand
TABLE 6
Results for revised Model-III.
and imprecise inventory costs which are represented by triangular fuzzy num-
bers. The triangular fuzzy numbers which are used in model-III have sym-
metrical shapes (see Figure 1.(a)). When we defuzzify these numbers by the
centroid method, we obtain average values of these numbers which are equal
to the values of crisp costs. Therefore, we have the same results with model-I.
However, if we use non-symmetrical fuzzy numbers (see Figure 1.(b)) then the
defuzzified values of these numbers will be different from the values of crisp
costs and the total cost values will also be different for these models. To ana-
lyze this situation, we use the following fuzzy numbers for unit holding and
unit shortage costs in model-III; c~ ~
h =$(2;3;5) and cs =$(4;6;7) and . The results
for the revised model-III are given below (Table 6).
When we compare the results of revised model-III with our other models,
we observe that the expected values of total costs vary from one model to
another. By changing the shapes of fuzzy triangular numbers in the revised
model-III, we increased the value of unit holding cost and decreased the value
of unit shortage cost. Therefore, best order quantity decreased to 3,000 in the
revised model. This situation shows that contrary to the crisp model, fuzzy
models propose highly flexible solutions for all possible states.
4Conclusion
This paper proposes single period inventory models with discrete demand
under fuzzy environment. In the proposed models inventory costs, demand
and both inventory costs and demand are imprecise, respectively. The objec-
tive of the models is to find the products best order quantity that minimizes
the expected total cost. The expected total cost that includes fuzzy parameters
is minimized by marginal analysis and defuzzified by centroid defuzzifica-
tion method. Contrary to the crisp model, fuzzy models propose highly flex-
ible solutions for all possible states. The proposed fuzzy models operate with
both precise and imprecise data. The developed models could be modified for
solving similar inventory problems such as inventory replenishment models.
For further research, we suggest the examination of an imprecise continuous
demand function instead of the discrete case of this paper. This will require
optimization techniques for solution procedure. Furthermore, in the fuzzy
models, we can also increase or decrease the fuzziness of the imprecise
386 H. Behret et al.
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