Abstract: In this paper, we present a new maintenance model
for a partially observable system subject to two failure modes,
namely a catastrophic failure and a failure due to the system
degradation. The system is subject to condition monitoring and the
degradation process is described by a hidden Markov model. A
cost-optimal Bayesian control policy is developed for maintaining
the system. The control problem is formulated in the semi-Markov
decision process framework. An effective computational algorithm is
developed, illustrated by a numerical example.