REPLACEMENT PROBLEM Introduction The study of replacement is concerned with situations that arise when some items such

as machines, men, electric-light bulbs, etc., need replacement due to their deteriorating efficiency, failure or breakdown. The deteriorating efficiency or complete breakdown may be either gradual or all of a sudden. For example, a machine becomes more and more expensive to maintain after a number of years, a railway time-table gradually becomes more and more out of date, an electric light bulb fails all of sudden, pipeline is blocked, or an employee loses his job and the like. In all such situations, there is a need to formulate a most economic replacement policy for replacing faculty units or to take some remedial special action to restore the efficiency of deteriorating units. Following are the situations when the replacement of certain item is to be done: i. ii. iii. Old items has failed and does not work at all, or the old item is expected to fail shortly. The old item has deteriorated and works badly or requires expensive maintenance. A better design of equipment has been developed.

The problem is to decide the best policy to adopt with regard to replacement. The need for replacement arises in many different situations so that different types of decisions may have to be taken. For example, (a) It may be necessary to decide whether to wait for certain item to fail, which might cause some loss, or to replace earlier at the expense of higher cost of the item. (b) The expensive item can be considered individually to decide whether to replace now or, if not, when to reconsider the item in question. (c) It is necessary to decide whether to replace by the same item or by a different type of them. In all such cases the ultimate objective is usually to enable the organization concerned to maximize its profit. Replacement problems, in general, are of three types. Viz., 1. Replacement of items that deteriorate with time. 2. Replacement of items that break down completely, and 3. Replacement of items that becomes out of date due to new developments. Only the first two types of the above shall be discussed in our study here. REPLACEMENT OF ITEMS THAT DETERIORATE WITH TIME Generally, the maintenance cost of certain items, e.g., machine, always increases gradually with time and a stage comes when the maintenance cost becomes so large that it is better and economical to replace the item with a new one. There may be a number of alternative choices and in each choice, we make a comparison between various alternatives by considering and safety risks, etc. In this section we

shall deal with techniques of making such comparisons under different conditions. It shall be assumed that the suitable expressions for maintenance costs are readily available. REPLACEMENT OF ITEMS THAT FAIL COMPLETELY We always come across practical situations in real life where the failure of certain item occurs all of a sudden, instead of gradual deterioration (e.g., the failure of an electric light-bulb). The failure of the item may result in complete breakdown of the system. If the time of failure can be predicted, preventive replacement will often be the appropriate course of action. However, in many cases it may not be possible to predict failure time accurately. In such cases we shall assume that the probability distribution of failure time may be obtained, based on the past experience. Here it is assumed that the failure occurs only at the end of a certain period, say till time t. The problem is to determine an optimal value of t so as to minimize the total cost involved in the system. We shall consider the following two types of replacement policies: 1. Individual replacement policy: Under this policy, an item is replaced immediately after its failure. 2. Group replacement policy: Under this policy, we take decision as to when all the items must be replaced, irrespective of the fact that items have failed or have not failed, with a provision that if any item fails before the optimal time, it may be individually replaced.