In this paper, a fuzzy inventory model for time-deteriorating items using penalty cost under the conditions of infinite production rate is formulated and solved. Penalty cost is assumed to be linear and exponential. Fuzziness is introduced in the cost component of holding cost and set up cost. Demand rate is also assumed to be fuzzy. In fuzzy environment all related parameters are assumed to be trapezoidal. Representing these three costs by trapezoidal fuzzy numbers, the optimum order quantity

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... s calculated using signed distance method and graded mean integration method for defuzzification. Numerical examples have been given in order to show the applicability of the proposed model. Sensitivity analysis is also carried out to detect the shift in the variables of interest of the system.