Optimal replacement under stochastic Environments
Optimal replacement has been an interesting research area for a long time. It considers a system (or a machine) that will deteriorate as it operates and thus should be replaced by a new one when it is too bad. There are two types of deterioration considered in reliability literature. The first one is due to the operation of the system itself, and the second one is caused by the influence of the environment, for example, shocks to the system. We call these two types, respectively, system deterioration and environment deterioration.
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