OPTIMIZING ROYALTY PAYMENTS FOR MAXIMUM ECONOMIC BENEFIT: A CASE STUDY UTILIZING MODIFIED SHOOTING AND DISCRETIZATION METHODS
Abstract
This research delves into the application of the modified shooting method for the numerical resolution of non-standard optimal control (OC) problems. More precisely, it concentrates on scenarios where the final state value component remains unknown and unconstrained, leading to a non-zero final shadow value or costate variable. Moreover, the objective function involved a piecewise royalty function, which poses a challenge due to its lack of differentiability within a specific time interval. Consequently, the novel modified shooting method was employed to ascertain the elusive final state value. The model’s differentiability is maintained throughout by adopting a continuous hyperbolic tangent (tanh) approximation. In addition, the construction of the Sufahani-Ahmad-Newton-Golden-Royalty Algorithm (SANGRA) and Sufahani-Ahmad-Powell-Golden-Royalty Algorithm (SAPGRA) was accomplished using the C++ programming language to formulate the problem. The outcomes of these algorithms, satisfying the criteria for optimality, were juxtaposed with non-linear programming (NLP) techniques such as Euler and Runge-Kutta, aside from Trapezoidal and Hermite-Simpson approximations. This groundbreaking discovery carries extensive practical implications as it propels the field forward and ensures the application of contemporary problem-solving methodologies. Moreover, the study underscores the significance of fundamental theory in effectively tackling current economic challenges.
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