Condition-based maintenance policy for a leased reman product

Many firms prefer to lease rather than to buy a product as leasing does not require a large investment cost. Leased products can be brand new products or remanufactured products (henceforth referred to as reman products). The market of reman products has grown in the last two decades due to the increasing concern of sustainability issues. This in turn brings a positive impact on the demand of leased reman products. In general, the reliability of the reman product is closed to the reliability level of a new product. To guarantee a high performance of a leased reman product, a more effective maintenance strategy is required. In this paper, we investigate a condition-based maintenance (CBM) policy to be used for maintaining a lease reman product. With the CBM policy, the condition of the reman product is monitored and controlled periodically, and hence it can avoid failure before it occurs and reduce unnecessary maintenance actions. This in turn improves the performance of the leased reman product and provides more value to the lessee. The lessor will incur a penalty cost if the performance is below a predefined threshold value. We obtain the optimal inspection interval minimizing the expected total cost and provide the numerical example for illustrating the optimal solution.