Monitoring machine operations and production process conditions using
on-line sensors has drawn increasing attention recently. In this paper
, we discuss a situation where an on-line sensor is used to monitor a
randomly deteriorating machine operation. The machine condition is des
cribed by a finite number of states, and the machine deterioration fol
lows a Markov process. It is assumed that the sensor measurement and t
he true machine condition have a statistical relation. A decision is t
o be made on when a machine setup should be made, based on the observe
d sensor measurement. A Markovian model is developed by considering th
e cost of operating the machine and the cost of performing preventive
maintenance, and a steady state threshold policy is developed by minim
izing the total cost. In addition, a heuristic method based on Bayes r
ule is proposed. A simulation study is used to study and compare the p
roperties of these two policies.