A condition-based maintenance policy is proposed in which the degradation of an engineering system is measured at some predetermined inspection times. The gamma process is used to study the system degradation. Two levels of thresholds are considered to do imperfect and perfect repair actions. The novelty of this work is describing the effect of imperfect repair by an arithmetic reduction of age model for a system subject to a gamma degradation process and extending the maximum likelihood approach to estimate the unknown parameters based on degradation increments. The main goal of the paper is to determine the optimal critical threshold in which the imperfect repair should be done. Toward this end, the cost rate criterion is used, and its sensitivity is discussed for the model parameters. Finally, an illustrative example is presented to clarify the proposed procedure.

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