Utilization of Fuzzy Inference System in System Dynamics to Design a Business Model for Distribution Companies in Iran

Abstract

Objective: Applying the system dynamics approach in businesses requires specialized knowledge, in particular, of defining mathematical relationships among variables. This stud seeks to make the use of this approach easier by providing a method for using linguistic variables and the fuzzy inference system in the systems dynamics approach. To evaluate the ease of use and efficiency of the presented method, this method would be used to define the relationship among variables in the purchasing department of a distribution company. Methods: To carry out this research, a literature review was first conducted in the field of fuzzy logic and system dynamics. Next, with the cooperation of an expert from the purchasing department of the distribution company under study, some fuzzy linguistic variables as well as their rules were determined. Finally, the SD model was obtained by using the fuzzy inference system. Results: The proposed approach can reflect the business dynamics of the distribution company in accordance with what is happening in practice. According to the feedback model feedback and based on the modified linguistic variables, appropriate values were obtained for decision making. In order to evaluate the hybrid approach, a fuzzy inference system was used to calculate the purchase rate according to the two factors of inventory and base sales. These two factors were expressed through linguistic variables by the words "low", "medium", and "high", while the purchase price, as the output of the inference system, was expressed through the five words "very low", "low", "medium", "much", and "too much", according to the expert. After implementing the model, the presented approach (by modifying the fuzzy linguistic variables) was found capable of changing the output to achieve the desired results, as the expert confirmed. Conclusion: The combined approach can be used in simulating similar cases (where human factor perception and decision-making play a significant role) and can easily reduce the complexity of the required formulas in the system dynamics approach. An important function of the hybrid approach used in this study was to model and simulate the real world in accordance with what is happening in practice.

Keywords

• fuzzy inference system
• fuzzy rule-based system
• linguistic variables
• systems dynamics