Optimal control of the production–inventory system with deteriorating items and tradable emission permits

Shoude Li

International Journal of Systems Science, 2014, vol. 45, issue 11, 2390-2401

Abstract: Using the well-known Arrow and Karlin (1958) dynamic production–inventory model and the model with tradable emission permits which was presented by Dobos (2005, 2007), we develop a model of the production–inventory system with deteriorating items and tradable emission permits. The objective of this paper is to apply the optimal control theory to solve the production–inventory problem with deteriorating items and tradable emission permits, and derive the optimal inventory level and the optimal production rate that minimise the total cost. The results are discussed with a numerical example and a sensitivity analysis of the optimal solution with respect to the parameters of the production–inventory system is carried out.

Date: 2014
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DOI: 10.1080/00207721.2013.770103

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