Abstract
The authors consider optimal production rate control in a failure prone manufacturing system. It is well known that the hedging point policy is the optimum controller for such a system. They show that under the hedging point policy the system can be treated as an M/M/1 queue. Therefore, existing results in queuing theory can be readily applied to obtaining the steady-state probability density function of the production surplus, based on which the optimal hedging point policy can be computed. To a large extent, the approach is based on sample path analysis. It not only provides an alternative way to solve the problem but also reveals some interesting insights. >
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