An integrated maintenance-upgrade policy for stochastically degrading products

Abstract

Providing appropriate maintenance policies for degrading products can help sustain good performance within the specified operating time without incurring overwhelming cost burdens. In practice, many manufacturers perceive upgrade as a strategic alternative to enhance product reliability and minimize maintenance costs. In this paper, we propose a maintenance strategy framework that integrates upgrade for stochastically degrading products. We consider two different scenarios that adapt to various manufacturer’s decision-making preferences. In the first scenario, the preventive maintenance (PM) target is fixed as a constant. In the second, the PM target is variable, which allows manufacturer to find the optimal policy via more flexible repair operations. In both scenarios, we establish maintenance models under a finite time horizon using a Markov decision process and study the structural properties of the optimal policy. We conclude that the optimal decision lies in employing a control limit policy among upgrade, PM and doing nothing. Numerical examples are then provided to illustrate the proposed methods. We find that with a variable PM target, the manufacturer is afforded greater flexibility, significantly reducing the expected cost. Additionally, when the target shifts from constant to variable, the trade-off among the three decisions of upgrade, PM, and doing nothing changes considerably.