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.