Elements of Numerical Mathematical Economics with Excel

10.8. Two state variables control problems

As we have seen in the CoV, also in the OC theory an important class of problems is represented by the problems where more state variables are involved.

We will present in the following example how the Excel worksheets can be easily used to solve these types of problems as well.

Example 1 (minimum control effort problem in two variables)

min { u } J = ∫ 0 2 1 2 u 2 d t

s.t. the following equations of motions conditions:

Figure 10.7-1 Inventory optimization ...