Stochastic Dynamic Programming

Stochastic Dynamic Programming is a method for making optimal decisions over time when outcomes are uncertain and influenced by chance. It breaks down complex problems into smaller stages, considering current choices, future uncertainties, and how each decision impacts future options. By evaluating possible outcomes at each step, it identifies the best strategy to achieve specific goals, even in unpredictable situations. This approach is useful in areas like finance, supply chain management, and energy planning, helping organizations plan optimally despite randomness and changing conditions.