Optimum Replacement of a System Subject to Shocks

A system is subject to shocks that arrive according to a nonhomogeneous (or homogeneous) Poisson process. Since each shock weakens the system and makes it more expensive to run, it is desirable to determine a replacement policy for the system. We consider the possibility of periodic replacement of the system, and exhibit a necessary and sufficient condition for the existence of an optimal finite period. The problem is investigated for both finite and infinite time horizons. Finally, we study a particular model for a system that fails on the second shock.