Optimal State-Dependent Replacement Policy for Deteriorating Systems

Abstract

This paper investigates the optimal state-dependent replacement policy for semi-Markovian deteriorating systems. It is assumed that the replacement time, replacement cost, operating cost rate and sojourn time distributions are all state-dependent. The optimization criterion is to minimize the expected long-run cost per unit time. Under some sufficient conditions on the cost and time parameters, we show that the optimal policy is of control limit type and has monotonic properties which facilitate the derivation of the optimal policy. Finally, a numerical example is given to illustrate the structure of the optimal policy.