Article ID: | iaor20021474 |
Country: | United States |
Volume: | 17 |
Issue: | 1 |
Start Page Number: | 93 |
End Page Number: | 107 |
Publication Date: | Jan 2001 |
Journal: | Communications in Statistics - Stochastic Models |
Authors: | Makis Viliam, Yang Jiangbin |
Keywords: | control processes, production |
We study the optimal control of a production process subject to a deterministic drift and to random shocks. The process mean is observable at discrete points of time after producing a batch and, at each such point, a decision is made whether to reset the process mean to some initial value or to continue with the production. The objective is to find the initial setting of the process mean and the resetting time that minimizes the expected average cost per unit time. It is shown that the optimal control policy is of a control limit type. An algorithm for finding the optimal control parameters is presented.