Dynamic Programming and Its Application
Dynamic Programming and Its Application
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A decision support system (DSS) was developed for determining the number of items to purchase of a capital intensive commodity and when these items should be purchased in order to satisfy projected operational requirements. Such decisionmaking represents a major planning effort of many organizations such as airlines, trucking companies, and satellite telecommunications firms. The determination of these decisions is complicated by the length of time necessary to produce the commodity, the potential for failure, uncertain future costs and capacity requirements, multiple, conflicting, and noncommensurate objectives, and various exogenous factors. The DSS that was developed uses the simulation of a large Markov decision process (MDP) to evaluate purchase strategies generated by (1) domain experts, (2) heuristic procedures, and (3) the solution of an aggregated version of the MDP. Application of the DSS to a spacecraft purchase problem of INTELSAT is discussed and is used to motivate the developments.