Abstract

Fuzzy set has been applied in many real applications to handle uncertainty. The aim of the paper is to study the replacement problem with uncertainty. This problem involves capital cost, scrap value or salvage value, maintenance cost or operating cost, and rate of interest having an imprecise value. Here, we assume the imprecise values as positive trapezoidal fuzzy numbers. Moreover, we consider that the value of money changes with fuzzy rate of interest due to market fluctuations. To deal with this type of problem, we first find out the present worth value of money and then determine the fuzzy annualized costs. By using Yager’s ranking method, comparison of fuzzy annualized costs is done to obtain an optimal replacement policy. Numerical example is provided to check the validity of the proposed method.

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