Design of Fuzzy Economic Order Quantity (EOQ) Model in the Presence of Inspection Errors in Single Sampling Plans

Abstract

Inventory management is the core of the supply chain management system, in which the economic order quantity (EOQ) model is a fundamental inventory model. This paper develops a fuzzy EOQ model in the presence of inspection errors in single sampling plans. The model assumes probability of mis-classifications. An inventory system is hypothesized where the orders undergo acceptance sampling, back-orders are eliminated, and defectives are set aside from the inventory. Due to the presence of vagueness in real time data, the rate at which an order turn to be scrap, the costs of holding, and the back-orders are characterized by fuzzy random variables. Since total profit involved is a random variable, maximum total expected profit is obtained. Some numerical examples are presented, and a sensitivity analysis study is carried out to check the validity of the model developed.