Robust optimal control of material flows in demand-driven supply networks

We develop a model based on stochastic discrete-time controlled dynamical systems in order to derive optimal policies for controlling the material flow in supply networks. Each node in the network is described as a transducer such that the dynamics of the material and information flows within the entire network can be expressed by a system of first-order difference equations, where some inputs to the system act as external disturbances. We apply methods from constrained robust optimal control to compute the explicit control law as a function of the current state. For the numerical examples considered, these control laws correspond to certain classes of optimal ordering policies from inventory management while avoiding, however, any a priori assumptions about the general form of the policy.