Ahstract- Machine degradation has significant impact on the production system performance. Its variation might lead to large deviation from the steady state performance of the whole system. In this work, we build up a model to estimate the long-term production performance of the two-machine-and-one-buffer production systems, given the real-time machine degradation signals. A phase-type distribution is generated to mimic the remaining life distribution of each machine given the degradation signal. Then a continuous Markovian model is formulated to predict longterm system throughput rate for a two-machine-and-one-buffer system. With the fluctuation of machine degradation signals, such a model can effectively estimate the expected system performance in real-time.