Title: Economic order quantity model for new product under fuzzy environment where demand follows innovation diffusion process with salvage value

Authors: Alok Kumar; Udayan Chanda

Addresses: FORE School of Management, B-18, Qutub Institutional Area, New Delhi – 110 016, India ' Department of Management, BITS Pilani, Pilani Campus, Room No.-6068-W, NAB, BITS Pilani, Pilani-333031, Rajasthan, India

Abstract: Diffusion pattern of new products have been well-documented in literature but research on integration of growth model and inventory policies are still scarce. Globalisation and technological breakthroughs' are creating significant risks of obsolescence at the product level. This calls for integration of diffusion dynamics in formulation of economic ordering policies for technology products. Unfortunately, most of the diffusion models available in literature do not recognise uncertainty in diffusion parameters, making it difficult to use in inventory-models. Here, we propose an economic order quantity model using fuzzy logic for new product where demand rate follows innovation diffusion process. Effect of deterioration is incorporated by considering the salvage value in the cost component. The comprehensive sensitivity analysis with respect to different parameters has also been performed to illustrate the effectiveness and behaviour of the model.

Keywords: innovation diffusion; economic order quantity; EOQ; trapezoidal membership function; fuzzy variables; function principles; salvage value; new products; growth models; inventory policies; technology products; uncertainty; inventory modelling; fuzzy logic; demand rate; deterioration.

DOI: 10.1504/IJPM.2016.076306

International Journal of Procurement Management, 2016 Vol.9 No.3, pp.290 - 309

Received: 05 Feb 2015
Accepted: 23 Mar 2015
Published online: 01 May 2016 *

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