  In this paper we introduce a new model where the concept of condition-based
maintenance is combined in a network setting with dynamic spare parts
management. The model facilitates both preventive and corrective maintenance of
geographically distributed capital goods as well as relocation of spare parts
between different warehouses based on the availability of stock and the
condition of all capital good installations. We formulate the problem as a
Markov decision process, with the degradation process explicitly incorporated
into the model. Numerical experiments show that that significant cost savings
can be achieved when condition monitoring is used for preventive maintenance in
a service network for capital goods.
