Fuzzy Inventory Model with Variable Production and Selling Price Dependent Demand under Inflation for Deteriorating Items

Abstract

The main purpose of this paper is to develop an inventory model under fuzzy approach by considering the effect of inflation and time value of money, to determine the optimal time period for inventory cycle and minimum total average costs. The model is integrated production inventory model developed where; the Demand has a direct linear impact on production rate. The model can be divided into four stages. In the first two stages with original production rate and subsequent change in production rate, inventory level rises. Third stage is time after the accumulation of inventory and before the deterioration starts, where demand which selling price dependent is depreciating the inventory level, while in the fourth stage deterioration occurs, which is considered to follow two parameter Weibull distribution. The back-order is not considered. Hexagonal fuzzy numbers are used to derive optimum solution and defuzzification by graded mean integration representation method. A numerical example is given to demonstrate the applicability of the purposed model and sensitivity analysis is carried out to reveal the impact of change in parameter values.