| Abstract: | A model of a deteriorating system with imperfect information is considered. The structures appropriate for such a model include failing machinery and depleted inventory systems. In an effort to add a new dimension to such models, it is assumed that the operator must pay an inspection cost to determine the precise state of the system. At the start of every time period, the operator is faced with three choices: repair, no action, or inspection. Under fairly general assumptions, the optimal policy for repair is found to be straightforward and intuitive. This result has two important areas of application. |
