Modelling and Decision-making on Deteriorating Production Systems using Stochastic Dynamic Programming Approach

This study aimed at presenting a method for formulating optimal production, repair and replacement policies. The system was based on the production rate of defective parts and machine repairs and then was set up to optimize maintenance activities and related costs. The machine is either repaired or replaced. The machine is changed completely in the replacement process, but the production rate of defective parts decreases in the repair process. The repair time and number of repairs will affect this process. The aim of this study is to find decision variables that minimize the final cost of repair, replacement, maintenance and prevention of failures in a given time horizon. As a case study, the variables were evaluated at Arak Pishgam Company to achieve optimal conditions. The proposed model was developed based on the semi-Markov decision process (SMDP). In addition, stochastic dynamic programming model was used to achieve optimal conditions.