Optimal control of a large dam

A large dam model is an object of study of this paper. The parameters $L^{lower}$ and $L^{upper}$ are its lower and upper levels, $L=L^{upper}-L^{lower}$ is large, and if a current level of water is between these bounds, then the dam is assumed to be in normal state. Passage one or other bound leads to damage. Let $J_1$ $(J_2)$ denote the damage cost of crossing the lower (upper) level. It is assumed that input stream of water is described by a Poisson process, while the output stream is state-dependent (the exact formulation of the problem is given in the paper). Let $L_t$ denote the dam level at time $t$, and let $p_1=\lim_{t\to\infty}\mathbf{P}\{L_t= L^{lower}\}$, $p_2=\lim_{t\to\infty}\mathbf{P}\{L_t> L^{upper}\}$ exist. The long-run average cost $J=p_1J_1+p_2J_2$ is a performance measure. The aim of the paper is to choose the parameter of output stream (exactly specified in the paper) minimizing $J$.