 Applications to Production and InventoryChapter 6 in Optimal Control Theory, 2021, pp 175-206 from Springer Abstract: Abstract Many manufacturing enterprises use a production-inventory system to manage fluctuations in consumer demand for their products. In Sect. 6.1, a model similar to the classic HMMS model is formulated as an optimal control problem that must balance the benefits of production smoothing versus the costs of holding inventory theory to minimize the total discounted system cost. The problem is completely solved using the maximum principle. The turnpike solution is also obtained when the horizon is infinite. Section 6.2 introduces a wheat trading model in which a wheat speculator must buy and sell wheat in an optimal way to take advantage of changes in the price of wheat over time. In Sects. 6.2.1–6.2.3, we solve the model when the short-selling of wheat is allowed. In Sect. 6.3, we introduce a warehousing constraint, i.e., an upper bound on the amount of wheat that can be stored. In addition to being realistic, the introduction of the warehousing constraint helps us to illustrate the concepts of decision and forecast horizons through examples. This section is expository and theoretical developments of these ideas are available in the literature. There are many exercises at the end of the chapter. Date: 2021 There are no downloads for this item, see the EconPapers FAQ for hints about obtaining it. Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:spr:sptchp:978-3-030-91745-6_6 Ordering information: This item can be ordered from DOI: 10.1007/978-3-030-91745-6_6 Access Statistics for this chapter More chapters in Springer Texts in Business and Economics from Springer |
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