Optimal Control of Production Management Systems with Diffusion Demand

Abstract

So far many studies about the production management systems have dealt with demand under uncertainty, which is regarded as a time-independent random variable.In this paper, we discuss the production management systems when demand follows Markov diffusions. The stochastic control method is applied to the analytical derivation of the optimal production policies. Main objects in this paper are to extend a deterministic model in the earlier contributions to the stochastic one and further to clear the properties of control in the production management systems, considering the differences of the shapes between some demand distributions.