Fuzzy Optimization Approach to Economic Order Quantity (FEOQ) Model for Deteriorating Items Including Variable Ordering Cost and Promotional Effort Cost
The instantaneous economic order quantity stylized model is introduced for analyzing the effect of variable ordering cost and promotional effort cost with deteriorated items. The objective of this model is to maximize the net profit so as to determine the order quantity in the fuzzy decision space. For any given number of replenishment cycles the existence of a unique optimal replenishment schedule are proved and further the concavity of the net profit function of the inventory system in the number of replenishment is established. The numerical analysis shows that an appropriate policy can benefit the retailer and that policy is important, especially for deteriorating items. Finally, sensitivity analyses of the fuzzy optimal solution with respect to the major parameters are also studied to draw some decisions with managerial insights which are cost effective for competitive advantage in a nonrandom uncertain market.
Fuzzy, FEOQ, Variable Ordering Cost, Promotional Effort Cost, Deterioration
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