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Replacement Decisions with Maintenance Under Uncertainty: An Imbedded Optimal Control Model

Ali Dogramaci, Nelson M. Fraiman

Operations Research · 2004 · Volume 52 · Issue 5

DOI: 10.1287/opre.1040.0133

Abstract

How should a manager make replacement decisions for a chain of machines over time if each is maintained by an optimal control model addressing uncertainty of machine breakdowns? A network representation of the problem involves arcs with interdependent costs. A solution algorithm is presented and replacement considerations under technological change are incorporated into a well-known optimal control model for maintenance under uncertainty (that of Kamien and Schwartz 1971). The method is illustrated by an example.

Keywords

dynamic programming/optimal control, models, facilities/equipment planning, maintenance/replacement, inventory/production policies, maintenance/replacement, reliability, replacement/renewal

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