On Optimal Utilization of Production Processes

We investigate the optimal utilization of production processes. We focus on finding the optimal shifts from one production process to another over some finite horizon, where a cost on the rate of change is imposed. We also demonstrate the existence of planning and forecast horizons and outline a procedure that identifies them. The forecast horizon indicates the amount of information required to make an optimal decision within the planning horizon. These results are obtained by using control theory, in particular, by analyzing the effect of two state-constraints that are inherent in the problem. The results are demonstrated by numerical examples.