Exact Solution for the Production Planning Problem with Several Regimes Switching over an Infinite Horizon Time

Dragos-Patru Covei ()
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Dragos-Patru Covei: Department of Applied Mathematics, The Bucharest University of Economic Studies, Piata Romana, 1st District, 010374 București, Romania

Mathematics, 2023, vol. 11, issue 20, 1-13

Abstract: We consider a stochastic production planning problem with regime switching. There are k ≥ 1 regimes corresponding to different economic cycles. The problem is to minimize the production costs and analyze the problem by the value function approach. Our main contribution is to show that the optimal production is characterized by an exact solution of an elliptic system of partial differential equations. A verification result is given for the determined solution.

Keywords: production planning; regime switching; PDE system (search for similar items in EconPapers)
JEL-codes: C (search for similar items in EconPapers)
Date: 2023
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Citations: View citations in EconPapers (1)

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