Hierarchical Production Planning in Dynamic Stochastic Manufacturing Systems: Asymptotic Optimality and Error Bounds

AbstractThis paper presents an asymptotic analysis of hierarchical manufacturing systems with stochastic demand and machines subject to breakdown and repair as the rate of change in machine states approaches infinity. This situation gives rise to a limiting problem in which the stochastic machine availability is replaced by the equilibrium mean availability. The value function for the original problem converges to the value function of the limiting problem. Moreover, a control for the original problem can be constructed from the optimal control of the limiting problem in a way which guarantees its asymptotic optimality. Asymptotic properties of the system trajectories are analyzed for both feedback and open loop controls in the system. The convergence rate of the value function for the original problem is found. This helps in providing an error estimate for the constructed asymptotically optimal control