Abstract
A previous paper [2] was concerned with the determination of optimal policies for restocking an inventory which is continuously depleted by a random process of demands. The purpose of the present paper is to develop a similar model for controlling the output of a dam whose random input depends on a homogeneous Wiener process. This reversal of the roles of input and output does not, by itself, change the character of the problem. But the consideration of set-up costs for ordering replacements, which leads to inventory policies of the (s, S) type, has no counterpart here. It is natural to regard the dam as a device for smoothing out random fluctuations in a flow of water and, under utility assumptions which reflect this attitude, it follows that the optimal output rate is a continuous function of the level of water in the reservoir. Our main object is to determine this function.
Publisher
Cambridge University Press (CUP)
Subject
Statistics, Probability and Uncertainty,General Mathematics,Statistics and Probability
Cited by
44 articles.
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