Optimal Switching Model for Production Network System

Abstract

This paper aims to derive optimal switching point for production network system. Due to the customer needs of reducing cost, delivery date shorting and provide quality, prompt change in the production plan became more important. In this paper, first, we discuss a switching model considered the risks of production, due date and quality for a production series line. Then, we present a switching model for parallel production process, where the risk depends on the previous situation and occurs repeatedly throughout multiple periods. Finally, we analyze the policies of optimal switching for the two production systems.