Fuzzy Break-Even Analysis

Fuzzy Break-Even AnalysisFuzzy break-even analysis (FBEA) is an innovative approach to break-even analysisBreak-even analysis that addresses the limitations of traditional crisp-set models by embracing and managing uncertainty through fuzzy logic. In classical break-even analysis, decision-makers rely on precise values for costs, revenues, and sales volume to determine the break-even pointBreak-even point. However, in real-world scenarios, these parameters are often imprecise due to factors such as market volatility, changing customer preferences, and fluctuating costs. FBEA transcends these limitations by modeling these parameters as fuzzy variables, allowing for a more realistic representation of uncertainty. The core principles of FBEA revolve around fuzzy set theory, linguistic variables, and membership functions. By employing fuzzy logic, FBEA quantifies uncertainty and vagueness in a systematic manner, enabling decision-makers to assess the range of possible outcomes rather than relying on single-point estimates. FBEA finds practical applications in various fields, including finance, economics, operations research, and strategic management. It is particularly valuable in scenarios involving pricing decisions, production planning, risk analysis, and market forecasting, where traditional break-even analysisBreak-even analysis falls short in capturing the complexity of real-world uncertainties. In this chapter, FBEA will be discussed under the frameworks of picture fuzzy setsPicture fuzzy set and spherical fuzzy setsSpherical fuzzy set. These extensions of FBEA will be applied on a common numerical example, and the steps of the methods will be demonstrated.