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DOI 10.1007/s12597-012-0118-x
T H E O R E T I C A L A RT I C L E

Inventory model with learning effect and imprecise

market demand under screening error

Dharmendra Yadav & S. R. Singh & Rachna Kumari

Accepted: 16 December 2012

# Operational Research Society of India 2013

Abstract In this paper, an inventory model is developed to deal the impre-

ciseness present in market demand. It is assumed that the received items are
not of perfect quality and after screening; imperfect items are withdrawn from
inventory and sold at discounted price. However, in practice, errors occur in
screening test. So, the screening process fails to be perfect. Due to acquain-
tance with handling methodology and system, holding cost and ordering cost
are gradually decreases from one shipment to another. So, learning effect is
incorporated on holding cost, ordering cost and number of defective items
present in each lot. This type of situation arises in many industries especially
for that industry where productivity is influenced by human labour needed for
final assembly such as: cars, ships, machines, aircrafts, electronics, and stabi-
lizer. Due to impreciseness in market demand, profit expression is fuzzy in
nature. To fuzzify the profit expression, Extension Principle is used and for
defuzzification centroid method is applied. Mathematically, it is shown that
profit expression is concave in nature. Finally, the feasibility of proposed
model and the effect of learning on optimal solution are shown through numerical
example.

Keywords Inventory model . Screening error . Extension principle . Learning effects .

Imperfect lot . Centroid method

D. Yadav (*)
Department of Mathematics, Keshav Mahavidyalaya, Delhi-34, India
e-mail: dharmendrayadav3580@gmail.com

S. R. Singh
Department of Mathematics, D.N. (P.G) College, Meerut 250001, (U.P), India
e-mail: shivrajpundir@gmail.com

R. Kumari
Department of Mathematics, Meerut College, Meerut 250001, (U.P), India
e-mail: kumarn_inde@yahoo.com
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1 Introduction

Harris [10] first proposed the Economic Order Quantity (EOQ) model and after that it
was modified by several researchers, changing the basic assumptions, with the
objective to make it more realistic and sensible. Several researchers studied inventory
models with market demand as crisp, stochastic or fuzzy parameter. Salameh and
Jaber [22], Jaber and Bonney [13], Papachristos and Konstantaras [19], Wee et al.
[26], Teng [24] developed the inventory model by taking market demand as crisp
parameters. It is observed that in practical situations, crisp market demand can be
justified only for the maturity phase of the product. Hadley and Whitin [9] developed
the model by taking stochastic demand. However, stochastic market demand is
applicable only for old product where probability distribution function can be deter-
mined by past data. For many products like clothes, fashion accessories, mobile
phones etc., the market demand cannot be predicted accurately and the probability
distribution function cannot be determined. To develop the inventory models of such
products, a major difficulty faced by researchers is to forecast the demand. It is not
possible for researchers to decide the exact market demand in such a complex,
changing and uncertain environment. So, it is often found that market demand is
imprecise in nature. Very few researchers have worked in this direction such as Chang
[2], Das et al. [3], Dutta et al. [6], Dey and Chakraborty [4], Singh et al. [23], Dey and
Chakraborty [5], Wang et al. [25].
In most of the classical economic order/ production quantity models, the items
received/ produced are implicitly assumed that items are of perfect quality. However,
in practice, it is not so. Presence of defective items in lot is due to natural disasters,
damage or breakage in transit and many more reasons. Therefore, the lot received/
produced may contain some defective items. In order to make some more realistic
inventory policies, several researchers considered the above scenarios in formulating
the inventory/ production models and studied the effect of imperfect quality on lot
sizing policy. Rosenblatt and Lee [20] assumed that the defective items could be
reworked instantaneously at a cost and the presence of defective products motivates
decision maker to order smaller lot sizes. Salameh and Jaber [22] assumed that the
defective items could be sold as a single batch at a discounted price prior to receiving
the next shipment. They observed that as the average percentage of imperfect
quality items decreases, the economic lot size quantity tends to increase. Goyal
and Cádenas-Barrόn [8] reconsidered the work done by Salameh and Jaber [22] and
presented a simple approach for determining the optimal lot size. Chang [2] determined
the optimal order lot size to maximize the total profit when lot contains imperfect quality
items. Papachristos and Konstantaras [19] extended the work of Salameh and Jaber’s
[22] model focusing on the timing of withdrawing the imperfect quality units from
stock. Wee et al. [26] developed an optimal inventory model for items with imperfect
quality and shortages backordering. They assumed that number of defective items
present in each lot is random variable. Eroglu and Ozdemir [7] studied the effect of
percentage of defective items present in each lot on optimal solution. Maddah and Jaber
[18] enriched the work of Salameh and Jaber [22] by applying renewal theory to obtain
the expected profit per unit time. Singh et al. [23] developed the model in which they
considered that received lot contains defective items. The work of Salameh and Jaber
[22] was explored by Hsu and Yu [11] related to quality issues. Ma et al. [17] developed
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the Economic Lot Scheduling Problem to determine an optimal common production

cycle in order to minimize the expected average cost per unit of time. They assumed that
production process may shift to an out-of-control state at a random time and conse-
quently produces a fixed percentage of defective items. Khan et al. [15] obtained optimal
production quantity/order quantity by using the similar approach as Salameh and Jaber
[22] take care of imperfect processes. An imperfect inspection process is utilized to
describe the defective proportion of the received lot. The defective items, classified by
the inspector and the buyer would be salvaged as a single batch that is sold at a lower
price. Konstantaras et al. [16] developed as EOQ model with imperfect quality and
shortages and assumed that the fraction of imperfect quality in each shipment reduces
due to learning. They observed that managers of company get benefited from the
learning opportunities in their logistics and inventory systems, especially comparing
with different production strategies and making choices regarding the selection of
the suppliers or the processes. Sarkar [21] developed an economic manufacturing
quantity model with price and advertising dependent demand pattern in an imperfect
production process. Author assumed that if the machine goes through a long run-
process it may shift from in-control state to out-of-control state and as a result,
system produces imperfect items. In order to reduce the production of the imperfect
items, author assumed that production cost, development cost, material costs are
dependent on reliability parameters. Author carried out this study in crisp environ-
ment without considering learning phenomenon.
Above survey reveals that many researchers developed the inventory model by
considering imperfect production system. Note that all of the previous researches
assumed that the screening process is perfect. However, in practice, screening process
fails to be perfect, two types of errors (Type 1 and 2) can occur. For the former, good
items mistakenly taken as defectives and thus result in the necessity of purchasing
additional items with extra cost; the latter arise when defective items mistakenly taken
as good items and then incur a penalty cost. It is also observed that most of the
researchers assumed that market demand as crisp parameter. But it is not always the
case because due to high complexities and uncertainty in market, market demand
cannot consider as crisp parameter. Most of the researchers assumed that number of
defective items present in each lot is random variable which follows the known
probability distribution function while it is not possible to find the probability
distribution function for newly launched product due to the non availability of
historical data. So, above models are not best suited for newly launched product.
Practically, the cost of the system engaged in repetitive operations decrease due to the
learning effect. Therefore, this natural phenomenon cannot be ignored while developing
the inventory model.
In this paper, generalized mathematical model is developed to complement the
shortcoming of all the previous models. The primary difference of this paper as
compared to previous studies are

1. Demand rate is imprecise in nature to cope up with the uncertainty in market

demand.
2. Effects of learning on holding cost and ordering cost are vital and relevant.
3. Number of defective items present in each lot follows the learning curve.
4. Screening process is not 100 % perfect.
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In addition, it is proved that the optimal order quantity in each lot exists uniquely
and the total profit associated with the inventory system is a concave function of the
lot size. Model is illustrated through numerical examples. Finally, summary of the
work and suggestions for future research are provided.

2 Preliminaries

To develop the inventory model, it would be useful to mention few mathematical

prerequisite. We state them as follows:

2.1 Learning curve

Geometric progression is the earliest learning curve representation that expresses the
decreasing cost required to accomplish any repetitive operation. That theory states that
as total produced units doubles, the cost per unit declines by some constant percentage
(e.g., [12, 28]). The power versus exponential form of the learning curve has been
debated by several authors; refer to Jaber [12] for discussion. There is almost unanimous
agreement among academicians and practitioners that the learning curve is best de-
scribed by a power as suggested by Wright [27]. It is worth noting that the learning curve
in practice is an ‘S’-shaped curve (Carlson [1], Jordan [14]), as described in Fig. 1. The
first phase (incipient) is the phase during which the worker is getting acquainted with the
set-up, the tooling, instruction, blueprints, the workplace arrangement, and the condi-
tions of the process. In this phase improvement is slow. The second phase (learning) is
where most of the improvement, e.g., reduction in errors, changes in the distance moved
takes place. The third and last phase (maturity) represents the learning of the curve.
S-shaped logistic learning curve is of the form

a
PðnÞ ¼ .... ð1Þ
g þ ebn

Where a, b, and g>0 are the model parameters, n is the cumulative number of
shipments, and P(n) is the number of defective items present in each shipment.

Three phase of learning Curve

Hours per Unit Output

Incipient
Learning
Maturity
Phase-1 Phase-2 Phase-3
Units

Fig. 1 Three phases of learning curve

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2.2 Extension principle

One of the most important notions in fuzzy set theory is the Extension Principle. The
Extension Principle provides a general method for combining non-fuzzy and fuzzy
concepts of all kinds, e.g., for combining fuzzy sets and relations, but also for the
operation of a mathematical function on fuzzy sets. Fuzzy sets can also be interpreted
as fuzzy numbers. In this case one can use the Extension Principle to add or multiply
these fuzzy numbers. The Extension Principle of Zadeh is a very important tool in the
fuzzy set theory which provides a procedure to fuzzify a crisp function.
Let f:X→Y be a crisp function and F(X) (respectively F(Y)) be the set of all fuzzy
sets (called fuzzy power set) of X (respectively Y). The function f:X→Y induces two
functions f:F(X)→F(Y) and f:F−1(X)→F−1(Y) and the Extension Principle of Zadeh
gives formulas to compute the membership function of fuzzy set f(A) in Y
(respectively f-1(B) in X) in terms of the membership function of the fuzzy set A in
X (respectively B in Y). The Extension Principle of Zadeh states that:
1. μf ðAÞ ð yÞ ¼ Sup ðμA ðxÞÞ; 8 A 2 FðX Þ
x2X ; f ðxÞ¼y

2. μf 1 ðBÞ ðxÞ ¼ μB ð f ðxÞÞ; 8 B 2 FðY Þ:

2.3 Centroid method

This method is used to obtain the equivalent crisp expression for fuzzy expression.
By doing so, we can analyze the developed model.
e ¼ ða; b; cÞ , where a<b<c. The membership function
Let us consider a fuzzy set A
e
of A is given by
8
< ð x  aÞ =ð b  aÞ a  x  b;
μeðxÞ ¼ ð c  x Þ =c  b b  x  c;
A :
0 otherwise:
e can be derived as
The centroid of A

R1
  xμ eðxÞdx
e 1
A 1
C A ¼ R1 ¼ ð a þ b þ cÞ
3
μ eðxÞdx
A
1

3 Assumptions and notations

3.1 Assumptions

The following assumptions are made for development of proposed mathematical model:
1) Market demand is imprecise in nature.
2) Shortages are not allowed.
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3) The replenishment is instantaneous, i.e., lead time is zero.

4) 100 % screening of items is done in each shipment.
5) Screening errors may occur. Therefore, a penalty cost is incurred for each
defective unit delivered to the customers.
6) Defective items are sold at a discounted price.
7) Time horizon is finite.
8) Holding cost and ordering cost follows the learning curve.

3.2 Notations

The following notation has been used to develop the model:

De : Fuzzy demand rate measured in units per unit of time
yn : Order quantity in units for the nth shipment, where n≥1
c: Unit purchasing cost
K(n) : Ordering cost per order is partly constant and partly decreases in each
cycle due to learning effect of employees ð¼ k0 þ k1 =na1 Þ where k0,
k1>0 and 0<α1<1.
h(n) : Holding cost per order is partly constant and partly decreases in each cycle
due to learning effect of employees ð¼ h0 þ h1 =na2 Þ where h0, h1>0 and
0<α2<1.
P(n) : Percentage
 of defective
 items in each shipment follows the learning curve
¼ a g þ ebn , a,b,g>0
s : Unit selling price per good quality unit
v: Unit discounted price per defective unit, v<c
Tn : Cycle time per shipment
x : Screening rate measured in units per unit of time
d: Unit screening cost
tn : Time to screen yn units, where tn=yn/x<Tn
m : Penalty cost due to error in screening process
α : Type 1 error
β : Type 2 error

4 Formulation of mathematical model

The behavior of the inventory level is shown in Fig. 2. Tn is the cycle time
for the nth shipment, where Tn ¼ yn ð1ðPðnÞð1bDÞþð1PðnÞÞaÞÞ . Screening of yn
units is performed and imperfect quality items are withdrawn from inventory
and sold as a single batch at a discount price by the end of the screening
period tn.
However, according to the assumption, since inspection errors may occur
during the 100 % screening process, the inventory level should be modified as
follows:
Nðyn Þ ¼ yn ð1  PðnÞð1  b Þ  ð1  PðnÞÞaÞ
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Inventory Level

p(n)yn
yn
tn

Tn Time

Fig. 2 Behavior of inventory level over time

The total revenue per cycle, R(yn), is the sum of total sales volume of ‘true’ good
quality, imperfect quality items and negative opportunity gains.
TRðyn Þ ¼ yn s  ð1  b Þðs  vÞyn PðnÞ  aðs  vÞyn ð1  PðnÞÞ .... ð2Þ
And the total cost per cycle is the sum of ordering cost, purchasing cost, screening
cost, holding cost and penalty cost. The penalty cost is caused by Type 2 error (β).
 
y2n ð1ðPðnÞð1b Þþð1PðnÞÞaÞÞ2 ðPðnÞð1b Þþð1PðnÞÞaÞy2n
TC ðyn Þ ¼ KðnÞ þ cyn þ dyn þ hðnÞ 2D þ x þ PðnÞyn bm
. . . ð3Þ

The net profit per cycle is the total revenue per cycle less the total cost per cycle.
Thus, the average profit per unit time can be written as:

TRð yn ÞTC ð yn Þ
TPU ðyn Þ ¼ Tn
¼ sD þ vD 1ðPðnÞ ð1b Þþð1PðnÞÞaÞ KðnÞD
ðPðnÞð1b Þþð1PðnÞÞaÞ ð1ðPðnÞð1b Þþð1PðnÞÞaÞÞyn
ðcþd ÞD yn ð1ðPðnÞð1b Þþð1PðnÞÞaÞÞ
 ð1ðPðnÞð1b Þþð1PðnÞÞaÞÞ  hðnÞ
 2

þ xðð1
PðnÞð1b Þþð1PðnÞÞaÞyn D PðnÞbDm
ðPðnÞð1b Þþð1PðnÞÞaÞÞ þ ð1ðPðnÞð1b Þþð1PðnÞÞaÞÞ
¼ F ðyn ÞD  Gðyn Þ
. . . ð4Þ
where

Fðyn Þ ¼ s þ v 1ðPðnÞ ð1b Þþð1PðnÞÞaÞ

ðPðnÞð1b Þþð1PðnÞÞaÞ  ð1
KðnÞ
ðPðnÞð1b Þþð1PðnÞÞaÞÞyn 
ðcþdÞ ðPðnÞð1b Þþð1PðnÞÞaÞyn
 ð1ðPðnÞð1b Þþð1PðnÞÞaÞÞ  hðnÞ xð1ðPðnÞð1b Þþð1PðnÞÞaÞÞ þ
PðnÞbm
ð1
ðPðnÞð1b Þþð1PðnÞÞaÞÞ 
G ð yn Þ ¼ hðnÞ yn ð1ðPðnÞð1b2Þþð1PðnÞÞaÞÞ
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4.1 Formulation of fuzzy inventory model

Since the market demand is considered as imprecise in nature so the objective

function can be redefined as
Maximize TPU (yn) ¼ Fðyn ÞD e  Gðyn Þ
Where yn>0.
wavy bar (~) denotes the fuzzification of the parameters. We express the fuzzy
demand rate D e as the triangular fuzzy number (D0 −δ1,D0,D0 +δ2). Suppose, the
membership function of the fuzzy demand rate D e is as follows:
8
> DðD0 d 1 Þ
< d1 D0  d 1  D  D0
μeðDÞ ¼ ðD0 þd 2 ÞD D0  D  D0 þ d 2
D >
: d2
0 elsewhere
Here, 0< δ1<D0, 0< δ2and D0 are given fixed numbers. δ1 and δ2 are determined by
the decision maker based on the given uncertainty. From Eq. (4), for each yn, let
Hyn ðDÞ ¼ Fðyn ÞD  Gðyn Þ
and y ¼ Hyn ðDÞ
H ðDÞþGðy Þ
then, we have D ¼ yn F ðyn Þ n
By the Extension Principle
 
H yn ðDÞþGð yn Þ
μ ð yÞ ¼ Sup μeðDÞ ¼ μe
H yn ðe
DÞ D D Fð yn Þ
D2H yn ð yÞ
8
>
> H yn ðDÞþGð yn ÞðD0 d 1 ÞFð yn Þ
ðD0  d 1 ÞFð yn Þ  Gð yn Þ  H yn ðDÞ  D0 Fð yn Þ  Gðyn Þ
< Fð yn Þd 1
¼ ðD0 þd 2 ÞFð yn ÞH yn ðDÞGð yn Þ
>
> D0 Fð yn Þ  Gð yn Þ  H yn ðDÞ  ðD0 þ d 2 ÞFð yn Þ  Gð yn Þ
: Fð yn Þd 2
0 elsewhere

Now, we find the centroid of μ   ðyÞ .

Hyn e
D

R1 R D Fðy ÞGðyn Þ yþGðyn ÞðD0 d 1 ÞFðyn Þ

1 μHy ðe ðyÞdy ¼ ðD00 d 1nÞFðyn ÞGðy nÞ Fðyn Þd 1 dy
n DÞ
R ðD0 þd 2 ÞFðyn ÞGðyn Þ ðD0 þd 2 ÞFðyn ÞyGðyn Þ
þ D0 Fðyn ÞGðyn Þ Fðyn Þd 2 dy
d 1 þd 2
¼ 2 F ðyn Þ ¼ PðsayÞ
and
R1 R D Fðy ÞGðyn Þ
1 yμHy ðe ðyÞdy ¼ ðD00 d 1nÞFðyn ÞGðy nÞ
y yþGðyn ÞðD 0 d 1 ÞFðyn Þ
Fðyn Þd 1 dy
D Þ
R ðD0 þd 2 ÞFðyn ÞGðyn Þ ðD0 þd 2 ÞFðyn ÞyGðyn Þ
n

þ D0 Fðyn ÞGðyn Þ y Fðyn Þd 2 dy

 
Fðyn Þðd 1 d 2 Þ ðd 1 þd 2 ÞFðyn Þ
¼ D0 Fðyn Þ  Gðyn Þ  3 2 ¼ RðsayÞ

The centroid of μ   ðyÞ is

Hyn e
D

F ð yn Þ ð d 1  d 2 Þ
Mðyn ; d 1 ; d 2 Þ ¼ R=P ¼D0 Fðyn Þ  Gðyn Þ  ....ð5Þ
3
where, 0< δ1< D0, 0< δ2.
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M(yn,δ1,δ2) is the estimate of total cost in fuzzy sense.

If δ1=δ2, then Eq. (5) reduces to Eq. (4).
Note that n in Eq. (5) is an input parameter and not a decision variable and P(n) is
constant. Therefore,
d2 M 2KðnÞðD0  1=3ðd 1  d 2 ÞÞ
¼ < 0; 8yn > 0;
dy2n ð1  ðPðnÞð1  b Þ þ ð1  PðnÞÞaÞÞy3n
This means that Eq. (5) is concave. By setting the first derivative of Eq. (5) equal
dyn ¼ 0 , and solving for yn we get
to zero, i.e., dM
vffiffiffiffiffiffiffiffiffiffiffiffiffiffiffiffiffiffiffiffiffiffiffiffiffiffiffiffiffiffiffiffiffiffiffiffiffiffiffiffiffiffiffiffiffiffiffiffiffiffiffiffiffiffiffiffiffiffiffiffiffiffiffiffiffiffiffiffiffiffiffiffiffiffiffiffiffiffiffiffiffiffiffiffiffiffiffiffiffiffiffiffiffiffiffiffiffiffiffiffiffiffiffiffiffiffiffiffiffiffiffiffiffiffiffiffiffiffiffiffiffiffiffiffiffiffiffiffiffiffiffiffiffiffiffiffiffiffiffiffiffiffiffiffiffiffiffiffiffiffiffiffiffi
  ffi
u 2KðnÞ D0  13 ðd 1  d 2 Þ
u
y* n ¼u 
t 2ðPðnÞð1bÞþð1PðnÞÞaÞðD0  13 ðd 1 d 2 ÞÞ
hðnÞ ð1  ðPðnÞð1  b Þ þ ð1  PðnÞÞaÞÞ2 þ x

. . . ð6Þ

where P(n)= gþea bn and P(n) is a continuously decreasing function over n since
dP(n)/dn<0, n>0.

5 Numerical example

Following parameters are used for numerical calculation.

D0=50,000 units/year, d 1 ¼ 15; d 2 ¼ 10 , x=175,200 units/year, d=$0.5/unit, c=
$25/unit, s=$50/unit k0=90, k1=10, h0=4, h1=1, α1=0.2, α2=0.2 and v=$20/unit, a=40
and g=999, α=0.02, β=0.03, m=$100/unit.
From Table 1, it is observed that as the value of ‘b’ increases the profit of the
organization increases. If the value of ‘b’ increases rapidly then slope of the profit
curve also increases and hence saturation level of profit achieve faster. For b=1, from

Table 1 Effect of learning on profit

Number of Shipment(n) Learning rate

b=1 b=1.2 b=1.4 b=1.6 b=1.8 b=2

1 1257560 1257570 1257570 1257580 1257580 1257590

2 1257730 1257750 1257770 1257810 1257870 1257950
3 1257860 1257940 1258080 1258320 1258680 1259220
4 1258080 1258360 1258890 1259700 1260670 1261520
5 1258510 1259300 1260460 1261560 1262230 1262550
6 1259330 1260730 1261910 1262480 1262680 1262750
7 1260510 1261930 1262550 1262740 1262780 1262800
8 1261630 1262520 1262760 1262810 1262820 1262820
9 1262320 1262740 1262820 1262830 1262840 1262840
10 1262650 1262820 1262850 1262850 1262850 1262850
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6
x 10
1.263

1.262

1.261
Profit

1.26

1.259
b=1.0
b=1.2
b=1.4
1.258
b=1.6
b=1.8
b=2.0
1.257
1 2 3 4 5 6 7 8 9 10
Number of Shipment
Fig. 3 Effect of learning on profit

Fig. 3, it is observed that saturation level of profit is not achieved till 10th shipment
while it can achieved in 10th shipment if b=2. So it clear that if the nature of manager
is of high learning from the past company will grow faster. If ‘b’ is considered as a
proxy for attitude and managerial capacity of a manager then it observes that a higher
level of ‘b’ helps in faster growth of the company.
6
x 10
1.263
No Learning Effect
Learning Effect on Holding Cost
Learning Effect on Orderning Cost
1.262
Learning Effect on % of Defective
Items Present in Each Lot
Learning Effect on all Three
1.261
Profit

1.26

1.259

1.258

1.257
1 2 3 4 5 6 7 8 9 10
Number of Shipment
Fig. 4 Profit vs Learning Effect
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1480
No Learning
Learning Effect on Holding Cost Only
Learning Effect on Ordering Cost Only
1460
Learning Effect on % of Defective Items
Present in Each Lot
Lot Size in Each Shipment

Learning Effect in all Three

1440

1420

1400

1380

1360
1 2 3 4 5 6 7 8 9 10
Number of Shipment
Fig. 5 Lot Size vs Learning Effect

Figure 4/ Fig. 5/Table 2 present the effect of learning on holding cost, ordering
cost and percentage of defective items present in each lot on profit and on lot size
independently and simultaneously. On the analysis following observations are
made:

a. From Fig. 5 it is clear that lot size increases as the holding cost decreases due to
learning effect. Thus in this case it is advisable to hold more inventories to secure
more profit (Fig. 4).
b. From Fig. 5 it is clear that lot size decreases as the ordering cost decreases due to
learning effect. So it is advisable for decision-maker to order the lot in smaller in
size when ordering cost decreases.
c. From Fig. 5 it is clear that lot size decreases when there is effect of learning on
percentage of defective items present in each lot. In this scenario manager order
smaller lot so that by learning the number of defective items decreases in each lot
and they can earn more profit for organization.
d. From Fig. 4 it is observed that profit is highly affected when we consider the
effect of learning on all three simultaneously.

From above observation we can say that a manager should focus to learn in all the
three directions rather then be a specialization of a particular field.
From Table 3/Fig. 6 it is observed that as the demand changes from +20 % to -
20 % the change in lot size in our proposed model is less than that of Papachristos and
Konstantaras [19] and Salameh and Jaber [22]. This shows that our proposed model is
very stable with respect to change in demand. This is due to incorporating the
vagueness in market demand. So, it is important to consider vague nature of market
demand in model.
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Table 2 Effect of learning on lot size and profit in different situation

Number of shipment When there is no Learning Learning Learning Effect Learning Effect
Learning Effect Effect only Effect only only on % of on all three
on Holding on ordering defective item simultaneously
Cost Cost in lot

1 Lot Size 1418.25 1418.25 1418.25 1418.15 1418.15

Profit 1257560 1257560 1257560 1257570 1257570
2 Lot Size 1418.25 1436.97 1409.04 1417.85 1427.24
Profit 1257560 1257650 1257560 1257760 1257750
3 Lot Size 1418.25 1447.08 1404.19 1416.88 1431.35
Profit 1257560 1257700 1257630 1257730 1257940
4 Lot Size 1418.25 1453.89 1400.97 1413.96 1431.84
Profit 1257560 1257730 1257640 1258100 1258360
5 Lot Size 1418.25 1458.97 1398.59 1406.84 1427.18
Profit 1257560 1257760 1257660 1259000 1259300
6 Lot Size 1418.25 1462.99 1396.73 1395.59 1417.78
Profit 1257560 1257780 1257670 1260410 1260730
7 Lot Size 1418.25 1466.31 1395.20 1386.05 1409.73
Profit 1257560 1257790 1257670 1261590 1261930
8 Lot Size 1418.25 1469.11 1393.91 1381.38 1406.37
Profit 1257560 1257810 1257680 1262160 1262520
9 Lot Size 1418.25 1471.54 1392.80 1379.69 1405.85
Profit 1257560 1257820 1257690 1262360 1262740
10 Lot Size 1418.25 1473.67 1391.83 1379.15 1406.36
Profit 1257560 1257830 1257690 1262430 1262820

From Fig. 7, as workers moves from first phase (incipient) to the second
phase (learning), learning effect due to acquaintance with the system increases
so that the number of defective items present in each shipment gradually
decreases.

Table 3 Variation in market demand and its effect on lot size

S.No. % Change % Change in lot size % Change in lot size in % Change in lot size in
in demand in our proposed model Papachristos and Konstantaras [19] Salameh and Jaber [22]

1 -20 -2.1162 -9.9911 -11.5040

2 -15 -1.9829 -7.6017 -8.7633
3 -10 -0.9591 -5.3119 -6.1034
4 -5 -0.0348 -3.1136 -3.5275
5 5 0.5487 3.0352 3.4543
6 10 0.9923 4.9975 5.8497
7 15 1.4254 6.8917 8.1902
8 20 2.7633 8.7224 9.4794
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Comprasion between our proposed model with others

10
Our proposed model
Papachristos and Konstantaras (2006)
Salameh and Jaber (2000)
5
% Change in lot size

-5

-10

-15
-20 -15 -10 -5 0 5 10 15 20
% Variation in Demand
Fig. 6 Comparison between our proposed model with others

Defective Item vs Learning Effect

60
b=1
b=1.2
50 b=1.4
Number of Defective item in per lot

b=1.6
b=1.8
40 b=2

30

20

10

0
0 5 10 15 20 25 30 35 40
Number of Shipment
Fig. 7 Defective Item vs Learning Effect
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6 Conclusion

In this paper, fuzzy inventory model with imperfect-quality items subjected to the
learning effect on holding cost, ordering cost and number of defective items present
in each received lot is developed. Market demand is imprecise and represented by
triangular fuzzy number. Centroid method is used as the method of defuzzification to
find the estimate of total profit per unit time in the fuzzy sense. Optimal lot size is
derived by using the calculus method to maximize the total profit expression.
Through numerical example, behavior and utility of developed model is investigated.
We considered the inventory problem in which demand parameter is consider as
fuzzy variable to handle the uncertainty of market. This model helps decision-maker
to take more stable decision in this uncertain environment. He/she has not to change
their decision by the vagueness of market demand.
It is also real practice that when the repetitive process goes on then we learn from
the past and our efficiency to take decision and to calculate the various cost of
inventory gradually increases. Due to this, the number of defective items presents
in each lot, holding cost and ordering cost not remains same in each cycle. So it is
relevant to consider learning effect on these three. This model provides the direction
to decision-makers to take account of learning effect while taking decision. By doing
so, he/she earns more profit for the organization. Thus we can say that manager kept
his learning process in all direction for the benefit of organization.
A future extension is to discuss model in more realistic situation by consider
impreciseness in different inventory related cost and taking different form of demand
pattern.

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