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

by

Ali Dogramaci
Bilkent University 

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.