Stochastic allocation of inspection capacity to competitive processes

Stochastic allocation of inspection capacity to competitive processes

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Article ID: iaor200348
Country: United States
Volume: 49
Issue: 1
Start Page Number: 78
End Page Number: 94
Publication Date: Feb 2002
Journal: Naval Research Logistics
Authors: ,
Abstract:

Optimal allocation and control of limited inspection capacity for multiple production processes are considered. The production processes, which operate independently but share inspection capacity, are subject to random failures and are partially observed through inspection. This study proposes an approach of stochastic allocation, using a Markov decision process, to minimize expected total discounted cost over an infinite time horizon. Both an optimal model and a disaggregate approximation model are introduced. The study provides some structural results and establishes that the control policy is of a threshold type. Numerical experiments demonstrate a significantly decreased amount of computational time required for the disaggregate approach when compared to the optimal solution, while generating very good control policies.

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