Optimal control of a marketing-production system

This paper is concerned with scheduling of a marketing-production system in which the demand rate changes in accordance with marketing actions. Our go al is to provide illuminating descriptions and insight on the optimal contr ol policies. A basic building-block model involving a single machine is dev eloped. The objective is to choose the rates of production and marketing to maximize the overall profit, Consisting of a pair of hedging points, the o ptimal policy is attractive in practice because of its simplicity and can b e computed by solving algebraic equations, Aiming at obtaining analytic sol utions, various control regions of the optimal policy are depicted; the str ucture of the hedging-point policy is fully analyzed.