Abstract
Many production processes require specific control variables to be kept at preset values. The variables are often subject to random influences and being off-target is generally associated with costs. The great majority of papers in this area have considered symmetric cost functions which take the mean value as target. When there is asymmetry in the cost function the target value needs to be adjusted to minimize the expected cost. This is demonstrated in the present article and illustrated with an application in the manufacture of construction panels. A table of adjustment factors is given.
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Notes on contributors
Michael Cain
Dr. Cain is a Reader in the Department of Economics.
Christian Janssen
Dr. Janssen is a Professor in the Department of Finance and Management Science.