Joint production and maintenance planning with machine deterioration and random yield

Yisha Xiang, C. Richard Cassady, Tongdan Jin, Cai Wen Zhang

Research output: Contribution to journalArticlepeer-review

40 Scopus citations


Production, yield and maintenance are three key components for sustaining the competitiveness of a manufacturing firm. In this paper, we investigate a joint production and maintenance planning problem in a periodic review environment subject to stochastic demand and random yields. The manufacturing system deteriorates from period to period according to a discrete-time Markov chain. The objective is to find an integrated lot sizing and maintenance policy for the system such that the aggregate cost associated with production, holding, backlogging and maintenance is minimised. We formulate this integrated planning problem as a Markov decision process and analyse the structural properties of the optimal policies. We prove that the optimal production and the maintenance policies both exhibit a control limit structure and show that the solution to the finite-horizon problems converges to that of the infinite-horizon problem.

Original languageEnglish
Pages (from-to)1644-1657
Number of pages14
JournalInternational Journal of Production Research
Issue number6
StatePublished - Mar 19 2014


  • Markov decision process
  • lot sizing
  • random yield
  • stochastic deterioration


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