Analysis of maintenance policies for finite life-cycle multi-state systems

Maintenance policies for multi-state systems (MSS) are often analyzed under infinite horizon assumptions. In practice, it is important to consider maintenance policies under a finite horizon because the life cycles of most systems are finite. In this paper, we consider a finite life-cycle MSS that is subject to both degradation and Poisson failures. We study two classes of maintenance policies – preventive replacements and corrective replacements, and their effectiveness in controlling the customer’s expected discounted maintenance cost (EDMC). For both policies, replacement decisions are modelled via two control parameters – a threshold on the current system state and a threshold on the residual life cycle, which is measured as the time span from present to the end of life cycle. We derive close-to-explicit forms of the cost models under each of the policy. Methodologies for optimizing the maintenance thresholds are further proposed. Computational results verify that preventive replacements outperform corrective replacements typically when the downtime cost per failure is relatively high compared to the repair cost.