Optimal Decision-Making in Fuzzy Economic Order Quantity (EOQ) Model under Restricted Space: A Non-Linear Programming Approach

Abstract

In this paper the concept of fuzzy Non-Linear Programming Technique is applied to solve an economic order quantity (EOQ) model under restricted space. Since 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 how to interpret optimal solutions arise. This paper allows the modification of the Single item EOQ model in presence of fuzzy decision making process where demand is related to the unit price and the setup cost varies with the quantity produced/Purchased. This paper considers the modification of objective function and storage area in the presence of imprecisely estimated parameters. The model is developed for the problem by employing different modeling approaches over an infinite planning horizon. It incorporates all concepts of a fuzzy arithmetic approach, the quantity ordered and the demand per unit compares both fuzzy non linear and other models. Investigation of the properties of an optimal solution allows developing an algorithm whose validity is illustrated through an example problem and ugh MATLAB (R2009a) version software, the two and three dimensional diagrams are represented to the application. Sensitivity analysis of the optimal solution is also studied with respect to changes in different parameter values and to draw managerial insights of the decision problem.