A Dynamic Optimization Model for Integrated Production Planning: Computational Aspects

The formulation and algorithmic solution of a class of optimal control models is discussed for integrated production, inventory, and research and development (R&D) planning. The model is based on the constrained minimization of the cost of labor, capital, and R&D engineering subject to a production constraint utilizing a Cobb-Douglas type input-output function. The solution technique utilizes a modification of a gradient projection algorithm due to Demyanov and Rubinov. Numerical results include a sensitivity analysis of the cost structures.