Beilin I.L., Khomenko V.V.Published in:
Russian Journal of Innovation Economics
– Volume 7, Number 4 (October-December 2017)

JEL classification: O32, O33, С45

Keywords: cost, fuzzy logic, innovative chemical project, management


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Abstract:

We suggest fuzzy logic approaches to managing the cost of an innovative chemical project. The urgency of development depends on a high degree of uncertainty related to the future economic efficiency of such projects. This involves the difficulties in transferring science-intensive technology from laboratory to production, traditionally high level of competition in the chemical sector and the lack of information about the project economy in the past. The theory of fuzzy sets is primarily related to the quantitative estimation of uncertainty, allows to formalize linguistic uncertainties and apply mathematical operators such as addition, subtraction, multiplication and division in a fuzzy domain. Consequently, a fuzzy number can also be used in economic analysis to replace an unambiguous cost assessment with their fuzzy values. We’ve found out that calculation based on continuous fuzzy numbers is relevant, when there is a need for a quick approximate estimation of the total costs of a large number of innovative projects proposed for investment. In cases when we need a thorough assessment of the total costs of a small number of projects that have passed the preliminary selection, calculations should be based on discrete fuzzy numbers.

Highlights:

The costs of an innovative chemical project can be expressed in discrete and continuous fuzzy numbers.
The addition of discrete and continuous fuzzy numbers of fixed and variable costs provides an opportunity to manage the overall costs of an innovative chemical project for any possible trajectory of the project life cycle.
To reduce the amount of computing work, continuous fuzzy numbers can be represented as "L-R" type numbers, and the integration of areas of uncertainty in this case is replaced by a simple finding of the area of the triangle.
Fuzzy logic calculation of economic indicators of an innovative project on the basis of discrete numbers allows managing the costs at any point in time at any point of the project life cycle trajectory taking into account the exact value of the probability of the magnitude of total and variable costs.

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