In this article, a fuzzy inventory model with allowable shortage is formulated and solved. Fuzziness is introduced by allowing the cost components (holding cost, ordering cost, shortages cost and demand). In fuzzy environment, all related inventory parameters are represented to be octagonal fuzzy numbers .These fuzzy numbers have been used in order to determine the optimal order quantity and optimal total cost for the inventory model. The calculation of EOQ is carried out through defuzzification by using ranking function method. The model is solved using Kuhn-tucker conditions method. The results of the models are illustrated with numerical example.

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