%0 Journal Article %A Leila Jafari and Viliam Makis %D 2019 %J International Journal of Industrial and Systems Engineering %B World Academy of Science, Engineering and Technology %I Open Science Index 151, 2019 %T Optimal Production and Maintenance Policy for a Partially Observable Production System with Stochastic Demand %U https://publications.waset.org/pdf/10010545 %V 151 %X In this paper, the joint optimization of the economic manufacturing quantity (EMQ), safety stock level, and condition-based maintenance (CBM) is presented for a partially observable, deteriorating system subject to random failure. The demand is stochastic and it is described by a Poisson process. The stochastic model is developed and the optimization problem is formulated in the semi-Markov decision process framework. A modification of the policy iteration algorithm is developed to find the optimal policy. A numerical example is presented to compare the optimal policy with the policy considering zero safety stock. %P 449 - 456