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A stochastic machine maintenance and sale problem: Results with different production functions

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  • Mark G. Tang

Abstract

In this article we solve and analyze a stochastic version of the Boiteux problem by employing the stochastic optimal control method. Our setup is close to that of Thompson [22]. Our focus is to analyze, under the same structure, how different production functions and how the variance in machine deterioration/maintenance affect our optimal machine maintenance and sale date decisions. © 1993 John Wiley & Sons, Inc.

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  • Mark G. Tang, 1993. "A stochastic machine maintenance and sale problem: Results with different production functions," Naval Research Logistics (NRL), John Wiley & Sons, vol. 40(5), pages 677-696, August.
    • Handle: RePEc:wly:navres:v:40:y:1993:i:5:p:677-696
    DOI: 10.1002/1520-6750(199308)40:53.0.CO;2-3
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    1. Rust, John, 1987. "Optimal Replacement of GMC Bus Engines: An Empirical Model of Harold Zurcher," Econometrica, Econometric Society, vol. 55(5), pages 999-1033, September.
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    3. S. Fischer, 1974. "The Demand for Index Bonds," Working papers 132, Massachusetts Institute of Technology (MIT), Department of Economics.
    4. Hollis B. Chenery, 1949. "Engineering Production Functions," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 63(4), pages 507-531.
    5. Fischer, Stanley, 1975. "The Demand for Index Bonds," Journal of Political Economy, University of Chicago Press, vol. 83(3), pages 509-534, June.
    6. Dov Pekelman & Edison Tse, 1980. "Experimentation and Budgeting in Advertising: An Adaptive Control Approach," Operations Research, INFORMS, vol. 28(2), pages 321-347, April.
    7. Gerald L. Thompson, 1968. "Optimal Maintenance Policy and Sale Date of a Machine," Management Science, INFORMS, vol. 14(9), pages 543-550, May.
    8. Syrquin, Moises, 1972. "Returns to Scale and Substitutability in the Repairmen Problem," Econometrica, Econometric Society, vol. 40(5), pages 937-941, September.
    9. William P. Pierskalla & John A. Voelker, 1976. "A survey of maintenance models: The control and surveillance of deteriorating systems," Naval Research Logistics Quarterly, John Wiley & Sons, vol. 23(3), pages 353-388, September.
    10. Morton I. Kamien & Nancy L. Schwartz, 1971. "Optimal Maintenance and Sale Age for a Machine Subject to Failure," Management Science, INFORMS, vol. 17(8), pages 495-504, April.
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