Optimal and self-tuning optimal control of a periodic-review hybrid production inventory system

In this paper, a periodic-review dynamic production inventory system for a single reusable product is investigated. There are two stocks, one for the serviceable items and one for the remanufactured ones. We assume that the items in either stock may be subject to deterioration. Items deterioration is of great importance to inventory theory. An optimal control is derived in the case where the deterioration parameters are known and a self-tuning optimal control strategy is applied in the case where the deterioration parameters are unknown. In particular, the recursive least-squares (RLS) method is used to identify the deterioration parameters. Simulations are conducted to illustrate the results obtained.