2017-01

A COMPARATIVE STUDY OF STOCHASTIC QUADRATIC PROGRAMMING AND OPTIMAL CONTROL MODEL IN PRODUCTION-INVENTORY SYSTEM WITH STOCHASTIC DEMAND

ABSTRACT This study compares the optimal control model and stochastic quadratic programming (SQP) model of a production-inventory system. A single product, without shortage in the case of a periodic-review policy with stochastic demand and deterioration rate as a function of time, is discussed. The items are subjected to deterioration via storage and the inventory goal level as a function of production. Demand isrepresented by a stochastic differential equation, converted to a stochastic constraint, and then to a deterministic constraint. We derive the optimality conditions of optimal control ...

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