Article ID: | iaor1995108 |
Country: | United States |
Volume: | 42 |
Issue: | 4 |
Start Page Number: | 765 |
End Page Number: | 774 |
Publication Date: | Jul 1994 |
Journal: | Operations Research |
Authors: | Johansen Sren Glud |
Keywords: | cost benefit analysis, programming: dynamic |
This paper concerns the optimal control of input to a FIFO jobshop with a single workstation. The input is jobs for which the processing and delivery times are observable upon arrival. The control is exercised by charging a price for each completed job. The objective is either profit maximization or welfare maximization. The semi-Markov decision processes that maximize the two objectives are studied simultaneously. Optimal prices are specified in terms of opportunity costs. The opportunity cost of a job is the expected future loss of earnings caused by having the job submitted to the shop. Results for the cases with and without discounting are established simultaneously by a new approach. It is based on the idea of studying the infinite-horizon model directly and it allows the state space and the decision set to be denumerable. Mild assumptions ensure that the opportunity cost is increasing as a function of the work backlog, and increasing and convex as a function of the processing time.