Customers arrive in a Poisson stream into a network consisting of two

service stations in tandem. The service rate
![u \\in [0, a]](/images/tex/3573.gif)
at station 1 is to be selected as a function of the state (

) where x
iis the number of customers at station

so as to minimize the expected total discounted or average cost corresponding to the instantaneous cost

. The optimal policy is of the form

or

according as

and

is a switching function. For the case of discounted cost, the optimal process can be nonergodic, but it is ergodic for the case of average cost.