AbstractThe advance of computer, automation and control technology has led to the adoption of continuous control and monitoring of production processes in high technology industries. By monitoring the state of the production process continuously, occurrence of any faults in the production process can be identified with zero or negligible detection delay. As a result, the costs of defective products, loss in yield and restoration are minimized. On the other hand, the sensitivity of the continuous monitoring system could result in very frequent repair and maintenance of the process, causing frequent disruptions of production. This paper addresses the question of the determination of the optimal level at which warning signals should be given of fault occurrences in a production system that is continuously monitored. A model is developed from which the expected total costs per time unit can be derived. A numerical example illustrates the determination of the optimal warning level under this framework.