This paper addresses the modelling of a problem of growing interest to production engineers, namely the appropriate and cost-effective way of condition monitoring of a production plant. Here a condition monitoring test is assumed which checks the state of wear of a component and records a (0,1) signal depending upon all being well or that wear is below a critical level with the possibility of imminent failure. Decision variables are the critical warning level and frequency of monitoring inspections. Consequence variables are the cost of maintaining plant and the availability of plant for production.