Theoretical Mathematics & Applications

A Controlled Optimal Stochastic Production Planning Model

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• Abstract

  This paper considers the state of the system which is represented by a controlled stochastic process. We shall formulate a stochastic optimal control in which the stochastic differential equations of a type known as Ito equations are considered which are perturbed by Markov diffusion process. Our goal is to use the stochastic optimal control principle to completely solve production planning model for the demand rate.