Dealing with Fuzziness in Cost-Volume-Profit Analysis

A major limitation of the traditional cost-volume-profit (CVP) analysis is its inability to account for uncertainty and risk. This deficiency has been resolved by the development of probabilistic and stochastic CVP models which require precise numerical assessment of uncertainties in sales demand. There remains, however, imprecision in the expert's assessment of the sales demand distribution. Sub-optimal decisions may result because such …