Interval Type-2 Fuzzy Capital Budgeting

Discounted cash flows methods are very popular in justifying investments. Uncertainty in investment parameters always exists and is inevitable. The fuzzy set theory is capable to capture this uncertainty through the membership functions of these parameters. However, ordinary fuzzy sets are criticized for having one single membership value for each certain parameter value. To remove this criticism, type-2 fuzzy sets were proposed. In this paper, we developed interval type-2 fuzzy capital budgeting techniques by using both triangular and trapezoidal interval type-2 fuzzy sets. The developed techniques are interval type-2 fuzzy net present value analysis, interval type-2 fuzzy future value analysis, and interval type-2 fuzzy equivalent uniform annual value analysis. These techniques are applied to a part of a real life investment project. The results show that the techniques produce consistent outputs, which means that the developed techniques can be used interchangeably.