Manufacturing High-Tech Products Subject to Rapid Obsolescence
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We formulate a production problem in high-tech industry as a free-final-time optimal control problem. The instance with linear production cost is equivalent to a problem proposed by Pangburn and Sundaresan. The instance with quadratic production cost allows us to find a solution which is closer to what is seen in the real world. In the latter instance, the optimal production rate is strictly decreasing in a neighborhood of the final time.