Decision in reality often have the characteristic of hierarchy because of the hierarchy of an organization＇s structure. In this paper, we propose a two-level hierarchic Markov decision model that considers the interactions of agents in different levels and different time scales of levels. A backward induction algo- rithm is given for the model to solve the optimal policy of finite stage hierarchic decision problem. The proposed model and its algorithm are illustrated with an example about two-level hierar- chical decision problem of infrastructure maintenance. The opti- mal policy of the example is solved and the impacts of interactions between levels on decision making are analyzed.
