Optimal Production Planning in Stochastic Jobshops with Long-Run Average Cost
Optimization, Dynamics, and Economic Analysis, Essays in Honor of Gustav Feichtinger, E.J. Dockner, R.F. Hartl, M. Luptačik, and G. Sorger (Eds.), Physica-Verlag, Heidelberg, 2000, 259-274
16 Pages Posted: 6 May 2020
Date Written: 2000
We consider a production planning problem for a general jobshop producing a number of products and subject to breakdown and repair of machines. The machine capacities are modeled as Markov chains. The objective is to choose the rates of production of the final products and intermediate parts on the various machines over time in order to meet the demand for the system’s production at the minimum long-run average cost of production and surplus. The problem is formulated as a stochastic dynamic program. We prove a verification theorem and derive the optimal feedback control policy in terms of the directional derivatives of the so-called potential function. Finally, we construct a potential function in the special case of a jobshop producing only one final product.
Keywords: Optimal Production, Stochastic Jobshop
JEL Classification: C61, M11, M20
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