This section presents the methodology for developing a manufacturing inventory model aimed at optimizing costs and managing inventory under uncertain conditions, utilizing fuzzy numbers and nonlinear programming techniques.
2.1. Fuzzy Inventory Model Components
We recall that the primary objective of this study is to develop a manufacturing inventory model that manages deteriorating products and incorporates price-dependent demands, as well as a production rate sensitive to reliability, under a partial trade credit policy. We apply fuzzy set theory to address uncertainties in costs and quality control, using the GMI method for defuzzification to provide more accurate and reliable interpretations of the data. Before presenting the formulation of the proposed model, we state the notations utilized in the model by means of
Table 1.
Next, we outline the following primary components of our optimization framework, that is, the decision variable, objective function, and constraints that govern the model:
The constraint presented in (
2) defines the production halt time (
), which is essential for balancing the production rate and demand. From a practical standpoint,
represents the time during which the manufacturer halts production to avoid overproduction or accumulation of inventory beyond capacity. In real-world scenarios, manufacturing systems must balance the rates of production and demand fulfillment. For example, in industries where products are perishable or have a limited shelf life, such as pharmaceuticals or food elaboration, producing too much can lead to excessive costs associated with spoilage or storage.
The first term of the constraint presented in (
2),
say, shows that the halt time is proportional to the production cycle length (
L) and inversely proportional to the production rate (
G). As production reliability (
) improves, the system becomes more efficient, reducing halt times. Conversely, lower reliability requires longer halt periods to minimize defects.
The second term of the constraint stated in (
2),
namely, introduces nonlinearity into the system, reflecting the increasing marginal cost or effort required to adjust production in response to growing inefficiencies over time. This is particularly relevant in scenarios where the rate of deterioration (⌀) strongly impacts production and storage decisions. Industries that handle fragile goods, such as electronics or high-tech equipment, can leverage this to optimize production cycles and minimize wastage due to quality deterioration over time.
In practical terms, the constraint presented in (
2) ensures that the production process is dynamically adjusted according to demand fluctuations, ensuring that the cycle period (
L) is aligned with the demand rate and quality control mechanisms. It also ensures that the production halt time (
) is non-negative, guaranteeing that the system remains feasible, even under varying production conditions.
The values of the constants in the model (see
Table 1), such as
, are generally estimated from empirical data, historical studies, or sensitivity analyses tailored to specific industry contexts. For instance, the constant
reflects the sensitivity of the deterioration rate to credit terms and can be adjusted according to the characteristics of the products (such as perishable goods or electronics) and the observed trade credit policies. In practice, these values may vary depending on the specific operational conditions and can be refined through simulations to match real-world scenarios more closely.
The inventory model relies on various mathematical and fuzzy logic concepts. For fuzzy logic, we use trapezoidal (TFNs), pentagonal (PFNs), and hexagonal (HFNs) fuzzy numbers to represent uncertain variables. These numbers define the boundaries of the fuzzy set, capturing the range of possible values for uncertain variables.
To provide a clearer context, we present a comparison between the proposed model and previous works in
Table 2,
Table 3 and
Table 4. These tables highlight the key contributions and differences, particularly in terms of handling uncertainty, trade credit policies, and inventory management under deteriorating conditions.
2.2. Fuzzy Numbers
Before defining specific fuzzy numbers, it is important to understand the concept of fuzzy sets and membership functions, as well as to establish the difference between fuzzy sets and fuzzy numbers.
Let
be the universe of discourse, which is the set of all possible elements under consideration. In the context of our fuzzy inventory model,
could include elements such as the production rate, holding cost, deterioration rate, sales price, and other key factors listed in
Table 1. These elements represent the various parameters that are subject to uncertainty.
To establish membership, a fuzzy set is defined as where is the function that assigns a degree of membership in the interval of to each element .
The support of a fuzzy set () is the subset of elements with a membership greater than zero, stated as . The core of a fuzzy set () is the subset of elements with a membership equal to one, stated as .
A fuzzy number is a specific type of fuzzy set that represents a quantity with uncertainty. Unlike general fuzzy sets, fuzzy numbers are often defined on the real number line and have specific shapes, such as hexagonal, pentagonal, and trapezoidal forms. These shapes are characterized by their membership functions, which define how the degree of membership varies over the range of possible values.
In the context of our inventory model, fuzzy numbers can represent various uncertain parameters, such as the holding cost, deterioration rate, and manufacturing rate. By using these specific forms of fuzzy numbers, we may model and manage the uncertainties in these parameters, leading to more robust decision making.
Different shapes of fuzzy numbers offer varying levels of detail and complexity in representing uncertainty as follows:
TFNs provide a good approximation of uncertainty by allowing a plateau of full membership, which can model situations with a more defined range of most likely values.
PFNs and HFNs offer even more flexibility, allowing for a more detailed representation of uncertainty, especially in cases where there are multiple levels of probability or asymmetric distributions.
Choosing the appropriate form of fuzzy numbers depends on the specific characteristics of the uncertainty being modeled and the available computational resources. More complex shapes can provide a more accurate representation of uncertainty but at the cost of increased computational complexity. We now proceed to define the
-type fuzzy numbers. Let
be two fixed functions that are both upper semicontinuous and decreasing such that
and
. A fuzzy number (
A) is said to be an
-type fuzzy number if the membership function (
) is given by
where
and
are the left and right spreads (widths) of
, respectively, and
is the core of
. An
-type fuzzy number is denoted as
.
The membership function describes how each point (x) in the universe of discourse () is mapped to a degree of membership ranging from zero to one. The left spread () determines how the membership value decreases from one to zero as x moves from to , while the right spread () determines how the membership value decreases from one to zero as x moves from to .
Next, we introduce the generalized TFNs. A quadruple
,
,
,
is called a generalized TFN if its membership function is formulated as
where
and
. If
, then the generalized TFN (
T) becomes a generalized TFN and is denoted by the triplet
.
Next, we define generalized PFNs. A fuzzy subset
, with
, and
, for
, and
, is called a generalized PFN is its membership function is presented as
where
,
,
, and
are the left lower, left upper, right upper, and right lower legs of
P, respectively. A generalized PFN passes through
,
,
,
, and
. Hence, it is denoted by
.
Now, we define the generalized HFNs. A fuzzy subset
;
, with
, and
, for
, where
, is called a generalized HFN if its membership function is stated as
where
,
,
, and
are the left lower, left upper, right upper, and right lower legs of
H, respectively. A generalized HFN passes through
,
,
,
,
, and
. Hence, it is denoted by
.
2.3. Defuzzification
Defuzzification is the process of converting a fuzzy quantity into a precise (crisp) value. This process is crucial in practical applications where decisions need to be made based on fuzzy data. For instance, in a fuzzy inventory model, we may have fuzzy numbers representing uncertain parameters like holding cost, production rate, and deterioration rate. To make concrete decisions, such as determining optimal production levels or estimating costs, it is necessary to defuzzify these fuzzy numbers into specific values.
There are various methods of defuzzification, each with its own approach to handling the fuzziness of the data. Some common methods rely on the concept of h levels (also known as h cuts) for GMI. An h-level set of a fuzzy set (, where is a real number representing the membership level used to define the cut) is a crisp set that contains all elements (x) for which , and it is defined as .
For example, consider a TFN (D) representing the deterioration rate of a product defined as . For a specific level h, say , the cut h would be the set of values x where the membership function is .
The GMI method deals with the weighted average of the membership values along the support of the fuzzy set using a specific weighted average of the cuts h. The two-step process is outlined as follows:
Step 1—Determine the left and right boundaries of the fuzzy set at that level ( and , respectively), for each level h.
Step 2—Compute a weighted average of the midpoint of the boundaries of Step 1, where each midpoint is weighted by its corresponding level h.
The continuous formula of the GMI method is given by
where
and
are the inverse functions defining the left and right boundaries of the fuzzy set at level
h, respectively, and
is the width of the support of the fuzzy set (
A), which can take any non-negative real value. The GMI method may be applied to various types of fuzzy numbers to obtain a crisp value. We now proceed with the application of the GMI method for TFNs, PFNs, and HFNs.
A TFN of is characterized by the following four points: (lower limit), (start of the plateau), (end of the plateau), and (upper limit). The membership function increases linearly from to , is constant from to , and decreases linearly from to . The GMI for a TFN is calculated as by considering the weighted average over the support of the fuzzy number. The weights correspond to the areas under the membership function, which can be divided into the following three regions: to with increasing membership, to with full membership, and to with decreasing membership. Points and are included twice in the weighted sum because they define the plateau where the membership is equal to one.
A PFN of has the following five points: (lower limit), and (intermediate points), (peak), and (upper limit). The function increases linearly from to , then from to , whereas it decreases linearly from to and from to . The GMI for a PFN is calculated as where the weights correspond to the areas under the membership function as follows: to with increasing membership, to with increasing membership, to with decreasing membership, and to with decreasing membership. Points and have weights of three each, and the peak at corresponds to a weight of four because it is the maximum membership.
An HFN of
consists of the following six points:
(lower limit),
and
(intermediate points),
and
(peak values), and
(upper limit). The membership function
is piecewise linear, with linear increases and decreases in membership. To derive the GMI for HFNs, we need to consider the weighted average over the support of the fuzzy number by applying the expression stated in (
3). This involves calculating the areas under the membership function for different segments as follows. From
to
(increasing membership), we have
and therefore
. From
to
(increasing membership), we have
and hence
. From
to
(constant membership), we have
, with
and
being the constants (
and
). From
to
(decreasing membership), we have
and therefore
. From
to
(decreasing membership), we have
and thus
.
By integrating these functions along h from zero to one, we obtain the weighted average as For each segment, the integral is calculated separately. From to , we have From to , we have From to , we reach From to , we attain From to , we obtain By combining these integrals, we derive the GMI formula for the HFN as Each weight corresponds to the area under the membership function, making points and (weights of three each) and peaks and (weights of two each) more relevant due to the maximum membership.
The earlier calculations illustrate how the GMI method is applied to different fuzzy numbers to obtain a crisp value that can be used for decision making in practical applications.