Self-tuning optimal control of periodic-review production inventory systems with deteriorating items

Control of inventory in production and operation systems is very important for better management and utilization of resources. In this paper, the optimal control of a periodic-review inventory system with items deterioration is considered. We are concerned with the problem of determining the production rate that minimizes a certain cost function. We deal with both cases where the deterioration coefficient is known and unknown. In the case where it is unknown, the recursive least squares algorithm is used to estimate this parameter. The main control objective is to maintain the inventory at a desired level in spite of the unknown model parameter and variable demand. The self-tuning optimal control is presented and the effectiveness of the proposed control algorithm is illustrated by simulation.