A periodic maintenance policy for a
degenerate production system in which the products are sold with
free minimal repair warranty is considered. The degenerate process
of the system is characterized by three states: in-control state,
out-of control state and failure state. The amount of time that the
process stays in in-control state and out-of-control state are both
assumed to be exponentially distributed. The production system is
overhauled at fixed time t or at failure, whichever occurs first.
The optimal periodic overhaul time minimizing the expected
cost per item per cycle is analytically discussed, and three special
cases show the property of the optimal value . In addition,
sensitivity analysis and numerical examples concerning model
parameters are carried out to illuminate the effects of the model
parameters on the optimal periodic overhaul policy.