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In: Statistics and Probability

A factory has a buffer with a capacity of 4 m3 for temporarily storing waste produced...

A factory has a buffer with a capacity of 4 m3 for temporarily storing waste produced by the factory. Each week the factory produces k m3 waste with a probability pk, where p0=1/8, p1=1/2, p2=1/4 and p3=1/8. If the amount of waste produced in one week exceeds the remaining capacity of the buffer, the excess is specially removed at a cost of 30 per m3. At the end of each week there is a regular opportunity to remove the waste from the storage at a fixed cost of 25 and a variable cost of 5 per m3. The following policy is used. If at the end of the week the storage buffer contains more than 2 m3, the buffer is emptied; otherwise, no waste is removed. Determine the ling-run average cost per week. You need to define the states and the transition probability matrix well first.

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