Fuzzy Logic Pricing Model for a New Product

Abstract

Classical decision making process allows a decision maker to make decision from alternatives that comprises of actions, acts or strategies, state of nature, probability distribution, criterion for selecting a course of action, and sometimes Posteriori Probability Distribution is used in other to improve upon the choice made. However, the achievement or failure that a decision maker experiences is a function of the amount of information available and its degree of accuracy. In life, only few instances guarantee decisions to be made under complete information, such as the type of food to eat, where to go, who to be a friend to, who to marry, what kind of business venture to start, etc. However, these choices or decisions may be limited by certain conditions that are beyond our control in some instances. Most managerial decisions are made with some degree of uncertainty. Business tycoon, may authorize substantial financial investment with less than complete information about the demand of a product. It is possible to formulate or describe a lot of real life decision problems with elements of imprecision or uncertainty. In this paper, fuzzy sets and fuzzy logic are employed in making decision on the initial price of a rim of 500 sheets A4 75gsm 210mm x 297mm multipurpose duplicating paper based upon the cost of materials, labor, and production. The result obtained is quite promising as it lies between a tolerable range that yields profit and also satisfies customers. Fuzzy logic is therefore recommended for use especially when there is uncertainty, imprecision, vagueness, and ambiguity surrounding a decision making environment.