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B.D. Craven, Sardar M.N. Islam, B.D. Craven & Sardar M.N. Islam

In: The SAGE Dictionary of Quantitative Management Research

Chapter 66: Optimal Control Models in Management

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Optimal Control Models in Management
Optimal control models in management
B.D.CravenSardar M.N.Islam
Introduction

A model for a management system, e.g. for managing inventory, or maintenance and replacement, or advertising, may be optimized, by choosing the ‘state variables’ describing the system so as to maximize or minimize an ‘objective function’ (e.g. a cost function), subject to restrictions on the state variables. If the system is changing with time, then the state variables are functions of time. In an ‘optimal control’ model, the change of the state function is described by a differential equation, with initial conditions at time zero, involving also a ‘control function’ which may be adjusted, within bounds, to optimize an objective (expressed as an integral over time.) An example is an inventory model with the inventory ...

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