J. of Mult.-Valued Logic & Soft Computing, Vol. 18, pp. 371386 2012 Old City Publishing, Inc.

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Single-Period Inventory Models with

Discrete Demand Under
Fuzzy Environment

Hlya Behret* and Cengiz Kahraman

Industrial Engineering Department, Istanbul Technical University, Macka, 34367,
Istanbul, TURKEY, E-mail: behreth@itu.edu.tr; kahramanc@itu.edu.tr

Received: February 21, 2010. Accepted: November 26, 2010.

This paper analysis single-period inventory models with discrete

demand under fuzzy environment. In the proposed models three
different cases are examined. In the first case, demand is repre-
sented by a triangular fuzzy number and a discrete membership
function. In the second case, demand is a stochastic variable while
inventory costs such as unit holding cost and unit shortage cost are
imprecise and represented by fuzzy numbers. In the third case, both
demand and inventory costs are imprecise. The objective 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
the centroid defuzzification method. Models are experimented with
illustrative examples and supported by sensitivity analyses.
Keywords: Inventory problem, fuzzy modeling, single-period, newsvendor, fuzzy
demand, fuzzy inventory costs.

1 Introduction

Single-period inventory problem can be defined as follows: A single order

can be placed for an item before the beginning of the selling period. There is
either no opportunity of placing any subsequent orders during the period, or
there is a penalty cost per item for special orders placed during the period.
The assumption of the single-period problem (SPP) is that if any inventory
remains at the end of the period, either a discount is used to sell it or it is
disposed of, and if an unsatisfied demand occurs, it results in a penalty cost.

*Corresponding author: Tel: +90 212 2931300 (2670) Fax: +90 212 2407260

371

180i-MVLSC.indd 371 09/02/2012 5:04:04 PM

372 H. Behret et al.

The objective of the single-period problem is to find products order quantity

that minimizes the expected total cost under linear purchasing, holding, and
shortage costs and probabilistic demand.
An extensive literature review on a variety of extensions of the single-
period problem (or newsvendor problem) and related multi-stage, inventory
control models can be found in [1] and [2]. Most of the extensions have been
made in the probabilistic framework, in which the uncertainty of demand is
described by probability distributions. The demand probability distribution is
usually obtained from evidence recorded in the past. However, if there is not
adequate evidence available, or evidence is recorded in different environ-
ments then the demand forecast will be based on subjective evaluations and
linguistic expressions. When subjective evaluations are considered, the pos-
sibility theory takes the place of the probability theory [3]. The fuzzy set
theory introduced by Zadeh [4], can represent linguistic data which cannot be
easily modeled by other methods [5]. Furthermore, the methods based on the
probability theory allow only quantitative uncertainties. In reality, most of the
evaluations are imprecise and fuzzy and they cannot be quantified.
Recently, interest in single-period problems under fuzzy environment has
increased and many extensions to the newsvendor problem have been pro-
posed [1]. A brief summary of the fuzzy single-period inventory models in
the literature given in Table 1.

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

Among the examined single-period inventory control models, the model

proposed by Petrovic et al. [7] considers both imprecise demand and impre-
cise inventory costs. In the other models either demand or inventory costs
are fuzzy. The solution methods of single-period inventory control models
generally need either a defuzzification method or a ranking method for fuzzy
numbers.
In this study, single-period inventory control models are analyzed under
three different fuzzy environments and the solutions of the models are com-
pared with each other. The objective of these models is to find the best order
quantity that minimizes the expected total cost. The expected total cost
including fuzzy parameters is minimized by marginal analysis and defuzzi-
fied by centroid defuzzification method. The models are experimented with
illustrative examples and supported by sensitivity analyses.
The remainder of the paper is organized as follows. The single-period
(newsvendor) problem is subjected in Section 2. In Section 3, firstly prelimi-
nary definitions about fuzzy modeling are presented and then three different
fuzzy single-period inventory control models are described and the results
of these models are compared with each other and sensitivity analyses are
performed. Finally the paper is concluded in Section 4.

2 Single-period (newsvendor) problem

In the literature, single-period inventory problems are known as newsvendor

or newsboy problems. Such problems are associated with the inventory of
items having one or more of the following characteristics [16];

They become obsolete quickly, e.g. newspapers, fashion goods etc.

They spoil quickly, e.g. fruit, vegetable etc.
They are seasonal goods where a second order during the season is difficult.
They are stocked only once, e.g. spare parts for a single production run of
products.
They have a future that is uncertain beyond the planning horizon.

The objective of the stochastic single-period (newsvendor) model is to deter-

mine the order quantity Q* for a fixed time period that will minimize the
expected total cost. The expected total cost function is the combination of
unit production cost, unit overage and unit underage costs. Items are pur-
chased (or produced) for a single-period at the cost of cp. The holding cost
which is the cost of storing excess products minus their salvage value is ch and
the shortage cost which is the cost of lost sales due to the inability to supply
the demand is cs. It is assumed that there is no initial inventory on hand.
As we know in the stochastic single-period problem, demand is a random
variable and represented by probability distributions. The total cost function
374 H. Behret et al.

[TC (Q; X)] will be as follows, where Q represents order quantity and X stands
for the demand;

TC (Q; X ) = c pQ + ch max {(Q - X ) , 0} + cs max {( X - Q) , 0}

(1)
Production cost Overage cost (OC) Underage cost (UC)

The expected total cost in the discrete case is;

Q -1
E[TC (Q; X )] = c p Q + x ch (Q - x0 ) pX ( x0 )
0 =0

(2)
+ x c ( x0 - Q ) p X ( x0 )
=Q s
0

where px(x0) is the probability that the demand X is equal to the value x0.
Let

E[TC (Q; X )] = E[TC (Q + 1; X )] - E[TC (Q; X )] (3)

Then, E[TC (Q; X )] is the change in expected total cost when we

switch from Q to Q+1. For a convex cost function, the best Q will be the
lowest Q where E[TC (Q; X )] is greater than zero. Therefore, we select the
smallest Q for which,

E[TC (Q; X )] 0 (4)

The equation above holds if,

E[TC (Q + 1; X )] - E[TC (Q; X )] 0 (5)

Substituting Equation (2) into Equation (5) leads to;

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

where pX (Q) is the probability that the demand X is smaller or equal to

the order quantity Q. The expected total cost, E[TC(Q;X)] will be mini-
mized by the smallest value of Q (call it Q*) satisfying the equation
above.
 Single-Period Inventory Models 375

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.

Let the demand of a product has the probability distribution represented

in Table 2. Items are produced for a single-period at the cost of cp=$4. The
holding cost is ch=$3 and the shortage cost is cs=$6. It is assumed that there
is no initial inventory on hand. For the given parameters optimum order quan-
tity is found as 4,000 from Equation (6) and the expected value of total cost
for the best order quantity is found as $24,250.

3Single-period inventory models under fuzzy

environment

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

If the valuation set ({0,1}) is allowed to be the real interval [0,1], A is

called a fuzzy set, A(x) is the grade of membership of x in A. The closer the
value of A(x) is to 1, the more x belongs to A. A is completely characterized
by the set of pairs.
A = {( x, A ( x )), x A} (8)

Definition 2: Fuzzy Numbers [5] Fuzzy numbers are a particular kind of

fuzzy sets. A fuzzy number is a fuzzy set R of the real numbers set with a
continuous, compactly supported, and convex membership function.
Let U be a universal set; a fuzzy subset of X is defined by a function
(x): X[0,1] is called membership function. Here, X is assumed to be the
set of real numbers R and F the space of fuzzy sets.
The fuzzy set F is a fuzzy number iff:
[0,1] the set A = {x R : ( x ) } , which is called -cut of ,
is a convex set.

I. (x) is a continuous function.

II. sup()={x R: (x)0} is a bounded set in R.
III. height =maxxX (x)=h0.

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

The graphical representations of symmetrical and non-symmetrical tri-

angular membership functions are shown in Figures 1.(a) and 1.(b).

Definition 3: Possibility measure [3] A possibility measure is a function

from P(X) to [0,1] such that
 Single-Period Inventory Models 377

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 possibility measure can be built from a possibility distribution, i.e.,

a function from X to [0,1] such that supxX ((x))=1 (normalization con-
dition). More specifically, we have

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.

Definition 5: Defuzzification [18] Defuzzification is the conversion of a

fuzzy quantity to a precise quantity; in contrast fuzzification is the conversion
of a precise quantity to a fuzzy quantity. Usually, a fuzzy system will have a
number of rules that transform a number of variables into a fuzzy result.
Defuzzification would transform this result into a single number.
Centroid method (also called center of area or center of gravity method) is
the most common of all the defuzzification methods. It is given by the alge-
braic expression as follows;

C(Z )
. z . dz

z* = , for continuous functions (11)

C(Z )
. dz

C(Z )
.z

z* = , for discrete functions (12)

C(Z )
378 H. Behret et al.

FIGURE 2.
(a) level-2 fuzzy set, (b) elements of level-2 fuzzy set A1, A2 and A3

where C k = ki =1 C i and C i is one of the membership functions those figure

the fuzzy output. This method is represented in Figure 3.

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;

s- fuzz() ( x ) = suppi =1,2,3,, n (i ) * ci ( x ), x X (13)

3.2Fuzzy Single-Period Inventory Control Model with

Imprecise Demand
Consider a single-period inventory problem.The demand is a trinagular
fuzzy number X (see Section 3.1) given by domain X = {x0 ; x1 ; x2 ;; xn }
with membership function x ( xi ), i = 0,1, 2,, n . Unit production cost, (cp),
unit holding cost (ch) and unit shortage cost (cs), are precise in this model.
The uncertain demand causes uncertain overage and underage costs. For a
given Q and xi X , the fuzzy total cost is as follows;
 Single-Period Inventory Models 379

FIGURE 3.
Centroid defuzzification method

TC (Q; X ) = c p Q + ch max{(Q - X ), 0} + cs max{( X - Q), 0} (14)

Production cost verage cost OC Underage cost UC

The membership functions of OC and UC are the same as the member-
ship function of demand and according to the properties of possibility mea-
~+UC
sure (see Section 3.1), OC ~ (xi) is obtained as follows;

~(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

For example, let us order a quantity of 4,000 units (Q=4,000). For

x2=2,000, OC=$3 * 2,000=$6,000 and UC =$6 * 0=$0 with possibility

of 0.25, for x6 =6,000, OC=$3 * 0=$0 and UC =$6 * 2,000=$12,000

with possibility of 0.75 and so on. The possibility distribution of (OC +UC )

is represented in Table 3. For example, (OC +UC ) is 6,000 for both x2 and x5
with possibility 0.25 and 1 respectively. From the properties of possibility

measure (see Section 3.1), the possibility of (OC +UC )=6,000 will be
~+UC
OC ~(6,000)= 1.
The defuzzified value of fuzzy overage and underage costs is; defuzz

(OC +UC )=$8,400 (from Equation (16)) and the expected value of fuzzy

total cost is, E[ TC (4,000; X )]=$24,400. The same procedure is applied
for other order quantities, best order quantity (Q*) which minimizes the
expected value of fuzzy total cost is found by marginal analysis.

3.3Fuzzy Single-Period Inventory Control Model with Stochastic

Demand and Imprecise Inventory Costs
In this model demand is a stochastic variable with probability function pX(xi),
while inventory costs such as holding and shortage cost are imprecise and
represented by fuzzy numbers (see Section 3.1). The membership functions

of OC and UC are the same as the membership function of holding and short-
age cost respectively.

OC
( xi ) = ch ( xi ) = cs (19)
UC

The expected value of fuzzy total cost is;

n
E [TC (Q; X )] = c pQ + (defuzz(OC ( xi )*pX ( xi ))
xi =0
(20)
+defuzz(UC ( xi )*pX ( xi ))

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.

3.4Fuzzy Single-Period Inventory Control Model with Imprecise

Demand and Imprecise Inventory Costs
This model considers both imprecise demand and imprecise inventory costs.
As in the first case the demand is a fuzzy number X given by domain X =
{x0; x1; x2; ; xn} which has a membership function X ( xi ), i = 0,1, 2,, n .
Additionally, holding and shortage costs are imprecise and represented by
fuzzy numbers.
The uncertain demand and uncertain inventory costs cause uncertain over-

age and underage costs. The unit penalty cost (PC ) is the sum of unit overage
cost and unit underage cost with the membership function PC ~.

PC = OC + UC (21)

The unit penalty cost (PC ) is a level-2 fuzzy set (see Section 3.1) which
means that it contains two fuzzy values and there are corresponding membership
degrees of these fuzzy values. A level-2 fuzzy set can be reduced to an ordinary
fuzzy set by s-fuzzification process (see Section 3.1). The membership function
of an ordinary fuzzy set is maintained via s-fuzzification as follows;

s- fuzz ( PC
( x ) = supp
) i =1, 2 ,3,, n PC
(i ) * ci ( x ), x X (22)

where c~i(x) is the ith possible fuzzy cost of PC and PC
~(i) is the possibility of
that cost. According to the properties of possibility measures, PC ~(i) is
obtained as,
(i ) = max xi X X ( xi ), i = 1, 2, 3,, n
PC
(23)
The expected value of fuzzy total cost in the discrete case is;
382 H. Behret et al.

E [TC (Q; X )] = c p * Q + defuzz(s - fuzz( PC )) (24)

Here, s-fuzzified penalty cost is defuzzified via centroid method. Fur-

thermore best order quantity (Q*) is found by the marginal analysis given in
Section 3.2.
Let the demand ( X ), given by domain X = {1,000; 2,000; 3,000; ;
9,000} represented by a triangular membership function X~(xi) given by
Equation (18). The holding and shortage costs are imprecise and repre-
sented by triangular fuzzy numbers, c~ ~
h =$ (2;3;4) and cs =$ (5;6;7), respec-
tively. Items are produced for a single-period at the cost of cp=$4. For

example, let us order a quantity of 4,000 units. The unit penalty cost (PC )
is a level-2 fuzzy set including imprecise demand and costs. For x2=2,000,

the fuzzy penalty cost will be PC =$(2;3;4) * 2,000=$(4,000;6,000;
8,000) with possibility of 0.25. For x6=6,000, the fuzzy penalty cost will

be PC =$(5;6;7) * 2,000=$(1,000;12,000;14,000) with the possibility
0.75 and so on. Fuzzy unit penalty cost values for Q=2,000 is given in
Table 4.

The graphical representations of level-2 fuzzy sets of PC when Q=4,000

and the corresponding s-fuzzified set (s - fuzz(PC )) are shown in Figure
4.(a) and Figure 4.(b), respectively.
According to the s-fuzzified value of the penalty cost, the expected value
of fuzzy total cost when Q=4,000 is calculated by using Equation (24). Cen-
troid defuzzification values have been obtained by using MATLAB R2008a
Fuzzy Logic Toolbox as in Figure 5.

E[ TC (4,000; X )]=$4 * 4,000+$13,498=$29,498 (25)
The same procedure is applied for all order quantities and best order
quantity (Q*) which minimizes the expected value of fuzzy total cost.

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 ).

3.5Comparison of the models

In the previous sections four different single-period models have been ana-
lyzed. We call them as follows;
384 H. Behret et al.

Model-I: Classical stochastic single-period (newsvendor) model,

Model-II: Fuzzy single-period inventory control model with imprecise
demand,
Model-III: Fuzzy single-period inventory control model with stochastic
demand and imprecise inventory costs,
Model-IV: Fuzzy single-period inventory control model with imprecise
demand and imprecise inventory costs.

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

Q Model-I Model-II Model-III Model-IV

~
E[TC (Q;X)]
~
E[TC (Q;X)] E[TC (Q;X)] E[TC (Q;X)]
1,000 28,000 28,000 28,000 31,098
2,000 26,000 26,000 26,000 30,547
3,000 24,563 24,563 24,563 29,982
4,000 24,250* 24,400* 24,250* 29,498
5,000 25,625 25,571 25,625 29,231*
6,000 29,250 28,615 29,250 31,166
7,000 34,563 34,600 34,563 36,928
8,000 41,000 41,000 41,000 42,998
9,000 48,000 48,000 48,000 49,391

* minimum total cost values.

TABLE 5
Comparison of the results.
 Single-Period Inventory Models 385

Q 1,000 2,000 3,000 4,000 5,000 6,000 7,000 8,000 9,000

E[TC (Q;X)] 26,667 25,000 23,896* 23,917 25,625 29,583 35,229 42,000 49,333

* minimum total cost value

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.

parameters such as inventory costs or demand. This case is also suggested to

be analyzed as a further study.

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