Optimum Production for a heaped stock dependent breakable item through variational principle

TL;DR

This paper develops an optimal control model for maximizing profit in the production of fragile, breakable items with stock-dependent breakability, using variational principles and nonlinear optimization.

Contribution

It introduces a novel optimal control framework considering breakability dependent on stock levels and non-linear holding costs, solved via variational principles and GRG method.

Findings

Optimal production rates maximize profit under breakability constraints.

Models with and without breakability are evaluated and compared.

Sensitivity analysis shows impact of breakability coefficient on profit.

Abstract

Breakability rate of fragile item depends on the accumulated stress of heaped stock level. So breakablility rate can be considered as dependent parameter of stock variable. The unit production cost is a function of production rate and also dependent on raw material cost, development cost and wear-tear cost. The holding cost is assumed to be non-linear, dependent on time. Here optimal control problem for a fragile item under finite time horizon is considered. The profit function which consists of revenue, production and holding costs is formulated as a Fixed-Final Time and Fixed State System(cf. Naidu (2000)) optimal control problem with finite time horizon. Here production rate is unknown and considered as a control variable and stock level is taken as a state variable. It is formulated to optimize the production rate so that total profit is maximum. As particular cases, models are evaluated with and without breakability. The models are solved by using conventional Variational Principle along with the non-linear optimization technique-Generalised Reduced Gradient Method (LINGO 12.0). The optimum results are illustrated both numerically and graphically. Some sensitivity analysis on breakability coefficient are presented.