Single Product Inventory Control Considering Unknown Demand Using Linear Quadratic Gaussian

In this paper, we apply an existing control method i.e. linear quadratic Gaussian (LQG) for control purposes of product stock level of single product inventory system considering unknown demand. The value of this unknown demand is approached by a random variable that set to be the disturbance in the used dynamical model. The control purposes is bring the inventory point level to some trajectory reference decided by the decision maker with minimal effort (purchase cost and holding cost). From the performed computational simulation with randomly generated data, the optimal decision which is the optimal purchased product volume for whole time periods was determined and the inventory point was followed the decided reference trajectory.