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Discounted cash-flows analysis: An interactive fuzzy arithmetic approach

Author

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  • Cédric Lesage

    (centre de recherche rennais en économie et en gestion - UR - Université de Rennes)

Abstract

Many models used in management and economics are based on an arithmetic basis. Moreover, the imperfection of generally available information in these disciplines has led to numerous decision support systems based on fuzzy arithmetic. However, their practical use did not have success expected, because their output were generally too imperfect to help a manager with relevant information. This paper outlines a computational method for decreasing the imperfection of the output of fuzzy arithmetic models. We suggest an approach aiming at integrating into the arithmetic models fuzzy information still not taken into account: the vague knowledge of the interaction potentially existing between the two variables of an arithmetic operation (addition, subtraction, division or product). Thanks to the modelling of three standard relations, we propose a solution towards an interactive fuzzy arithmetic, which reduces the imperfection of the output to help the decision maker. We apply this approach to the choice of investment by the criterion of the Net Present Value resulting from a Discounted Cash-Flows Analysis.

Suggested Citation

  • Cédric Lesage, 2001. "Discounted cash-flows analysis: An interactive fuzzy arithmetic approach," Post-Print hal-00485731, HAL.
    • Handle: RePEc:hal:journl:hal-00485731
    DOI: 10.1051/ejess:2001115
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    Citations

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    Cited by:

    1. Chang, Ping-Teng, 2005. "Fuzzy strategic replacement analysis," European Journal of Operational Research, Elsevier, vol. 160(2), pages 532-559, January.
    2. Haktanır, Elif & Kahraman, Cengiz, 2023. "Intuitionistic fuzzy risk adjusted discount rate and certainty equivalent methods for risky projects," International Journal of Production Economics, Elsevier, vol. 257(C).
    3. Bocharnikov, Victor & Sveshnikov, Sergey, 2007. "Algorithm of arithmetical operations with fuzzy numerical data," MPRA Paper 17353, University Library of Munich, Germany.
    4. Anna Łyczkowska-Hanćkowiak & Krzysztof Piasecki, 2018. "The present value of a portfolio of assets with present values determined by trapezoidal ordered fuzzy numbers," Operations Research and Decisions, Wroclaw University of Science and Technology, Faculty of Management, vol. 28(2), pages 41-56.
    5. Anna Łyczkowska-Hanćkowiak & Aleksandra Wójcicka-Wójtowicz, 2023. "On portfolio analysis using oriented fuzzy numbers for the trade-related sector of the Warsaw Stock Exchange," Operations Research and Decisions, Wroclaw University of Science and Technology, Faculty of Management, vol. 33(4), pages 155-170.
    6. Anna Łyczkowska-Hanćkowiak, 2019. "Sharpe’s Ratio for Oriented Fuzzy Discount Factor," Mathematics, MDPI, vol. 7(3), pages 1-16, March.
    7. Krzysztof M. Piasecki, 2011. "Effectiveness of securities with fuzzy probabilistic return," Operations Research and Decisions, Wroclaw University of Science and Technology, Faculty of Management, vol. 21(2), pages 65-78.
    8. Krzysztof Piasecki & Joanna Siwek, 2018. "The portfolio problem with present value modelled by a discrete trapezoidal fuzzy number," Operations Research and Decisions, Wroclaw University of Science and Technology, Faculty of Management, vol. 28(1), pages 57-74.
    9. Piasecki, Krzysztof, 2011. "Effectiveness of securities with fuzzy probabilistic return," MPRA Paper 46214, University Library of Munich, Germany.

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