Abstract: A production system consisting of a set of failure prone equipment is studied , whose state jump rate depends on its aging. A new hierarchical optimal production rate control framework involving setup and aging of the system is discussed. By introducing new state variable and new time horizon of the objective function, the original problem is decomposed and the necessary and sufficient dynamic programming optimality conditions in the lower level are proposed according to the optimal production duration. Simulation results show the feasibility of the proposed approach in practice.