Drift control with changeover costs

Name: Drift control with changeover costs
Author: Matoğlu, Melda Örmeci, Vate, J. V.

İsim	Drift control with changeover costs
Yazar	Matoğlu, Melda Örmeci, Vate, J. V.
Basım Tarihi:	2011
Basım Yeri	- Informs
Konu	Inventory/production, Stochastic, Stochastic model applications
Tür	Süreli Yayın
Dil	İngilizce
Dijital	Evet
Yazma	Hayır
Kütüphane:	Özyeğin Üniversitesi
Demirbaş Numarası	0030-364X
Kayıt Numarası	68f04ab4-890d-4f5e-8cf9-cc235b6f85fe
Lokasyon	International Finance
Tarih	2011
Notlar	Due to copyright restrictions, the access to the full text of this article is only available via subscription.
Örnek Metin	We model the problem of managing capacity in a build-to-order environment as a Brownian drift control problem and seek a policy that minimizes the long-term average cost. We assume the controller can, at some cost, shift the processing rate among a finite set of alternatives, for example by adding or removing staff, increasing or reducing the number of shifts, or opening or closing production lines. The controller incurs a cost for capacity per unit time and a delay cost that reflects the opportunity cost of revenue waiting to be recognized or the customer service impacts of delaying delivery of orders. Furthermore, he incurs a cost per unit to reject orders or idle resources as necessary to keep the workload of waiting orders within a prescribed range. We introduce a practical restriction on this problem, called the S-restricted Brownian control problem, and show how to model it via a structured linear program. We demonstrate that an optimal solution to the S-restricted problem can be found among a special class of policies called deterministic nonoverlapping control band policies. These results exploit apparently new relationships between complementary dual solutions and relative value functions that allow us to obtain a lower bound on the average cost of any nonanticipating policy for the problem, even without the S restriction. Under mild assumptions on the cost parameters, we show that our linear programming approach is asymptotically optimal for the unrestricted Brownian control problem in the sense that by appropriately selecting the S-restricted problem, we can ensure its solution is within an arbitrary finite tolerance of a lower bound on the average cost of any nonanticipating policy for the unrestricted Brownian control problem.
DOI	10.1287/opre.1100.0868
Cilt	59

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Drift control with changeover costs

Yazar Matoğlu, Melda Örmeci, Vate, J. V.

Basım Tarihi 2011

Basım Yeri - Informs

Konu Inventory/production, Stochastic, Stochastic model applications

Tür Süreli Yayın

Dil İngilizce

Dijital Evet

Yazma Hayır

Kütüphane Özyeğin Üniversitesi

Demirbaş Numarası 0030-364X

Kayıt Numarası 68f04ab4-890d-4f5e-8cf9-cc235b6f85fe

Lokasyon International Finance

Tarih 2011

Notlar Due to copyright restrictions, the access to the full text of this article is only available via subscription.

Örnek Metin We model the problem of managing capacity in a build-to-order environment as a Brownian drift control problem and seek a policy that minimizes the long-term average cost. We assume the controller can, at some cost, shift the processing rate among a finite set of alternatives, for example by adding or removing staff, increasing or reducing the number of shifts, or opening or closing production lines. The controller incurs a cost for capacity per unit time and a delay cost that reflects the opportunity cost of revenue waiting to be recognized or the customer service impacts of delaying delivery of orders. Furthermore, he incurs a cost per unit to reject orders or idle resources as necessary to keep the workload of waiting orders within a prescribed range. We introduce a practical restriction on this problem, called the S-restricted Brownian control problem, and show how to model it via a structured linear program. We demonstrate that an optimal solution to the S-restricted problem can be found among a special class of policies called deterministic nonoverlapping control band policies. These results exploit apparently new relationships between complementary dual solutions and relative value functions that allow us to obtain a lower bound on the average cost of any nonanticipating policy for the problem, even without the S restriction. Under mild assumptions on the cost parameters, we show that our linear programming approach is asymptotically optimal for the unrestricted Brownian control problem in the sense that by appropriately selecting the S-restricted problem, we can ensure its solution is within an arbitrary finite tolerance of a lower bound on the average cost of any nonanticipating policy for the unrestricted Brownian control problem.

DOI 10.1287/opre.1100.0868

Cilt 59