Statistical Analyses of Industrial Property Retirements By Rosey Winrrey, M.S. Research Engineer BUuLuETIN 125 IOWA ENGINEERING EXPERIMENT STATION IOWA STATE COLLEGE OF AGRICULTURE AND MECHANIC ARTS OFFICIAL PUBLICATION Vol. XXXIV Dec. 11, 1935 nS Published weekly ty Iowa State College of Agriculture and Mechanic Arts, Ames, lows. Entered as second-cl ed for railing at the special rate of postage pro- vided for in Section 429, Le i. Act of ‘Accust 24, 1912, authorized April 12, 1920STATE BOARD OF EDUCATION OF IOWA Members Hon. George T. Baker, President Hon, Thos. W. Keenan Hon. Anna B. Lawther Hon. John P. Wallace Hon. Harry M. Neas Hon, J. H. Anderson Hon. S. J. Galvin Hon, Henry C. Shull Hon. Cora E. Simpson Finance Committee Hon. W. R. Boyd, Chairman Hon, W. H. Gemmill, Secretary Hon, William G. Noth !OWA ENGINEERING EXPERIMENT STATION STAFF* Charles E. Friley, LL.D. Mie wisi pay baby 3 President, ex-officio Thomas R. Agg, C.H. . a ri “ < A é E . Director J. Brownlee Davidson, M.B., A.E., D.Ener, : 5 Agricultural Engineer Allen H. Kimball, MS... a . . : : Architectural Engineer Paul B. Cox, B.S. in Cer,E., D.Se. ® 3 ¥ : Ceramic Engineer Orland R. Sweeney, Ph.D. 5 = : Chemical Engineer Almon H. Fuller, M.S, C/E, Sop," < Civil Engineer Mervin S. Coover, EE. : Electrical Engineer Frank D. Paine, BS,in BB... *, ) Industrial Engineer Mark P, Cleghorn, ME. a Z - . Mechanical Engineer Herbert J. Gilkey, M, . Engineer in Applied Mechanics George M. Fuller, MBA. | . res ee Economist Anson Marston, CE. D.Engr. a » - * - Research Engineer fRobley Wintrey, M, +. Bulletin Editor and Research Engineer William J. Schlick, eee ta ket ee ah FS ca) Oly Mnginess Max Levine, Ph.D, < ae etpsg) ccd ce «, Bacteriblogiay John H. Griffith, M.s" 7 : Rest sh Engineer Merlin G. Spangler, M.S., CB. th é . | Associate Structural Engineer Ralph A. Moyer, M'S,GB. . °. Associate Highway Engineer qunel KAmola, Phd. 5 2 SC Associate Chemical Engineer Wuney O; Avres, Cp.” * associate Agricultural Engineer noter M: Dunagan, AB, MS, cu. | .” Associate Materials Engineer arry L. Daasch, M.S, M-E., Met. . Associate Mechanical Engineer Dio L. Holl, Ph.D. Jean Hempstead, Mal, William E. Galligan, M.S. Oral A, Brown, Ph.D. . #Vernon P. Jensen, Pi.D. Victor P. Hessler, Php. . Gussie H. Nelson, MS ess Raymond Paustian, MS., CB, Frank 8. Lightburn, B.S’ in EX, Glenn Murphy, PhD, Wiliam C. Dachtler, B.S) in Gn.” Roy J. Helfinstine, B.S in ME Plomas R. McElhinney, BS. in chp,” Prank B. Hodgdon, M$, Stephen J- Chamberlin. °° Reuben C. Riedesel, B.S, in MLE’ . + ‘ 3 ‘ : Associate Analyst : : Associate Research Engineer + Fi Assistant Sanitary Engineer * + Assistant Electrical Engineer Assistant Engineer in Applied Mechanics . Assistant Blectrical Engineer Assistant Chemical Engineer * - Assistant Highway Engineer » +. Assistant Research Engineer Assistant Materials Engineer Junior Engineering Economist Junior Mechanical Engineer . Junior Chemical Engineer > : Junior Ceramic Engineer . 7 Junior Materials Engineer mer Kalsem |" - ‘Instrument Maker *As of Sept. 16, 1936, Beye ff Absistant to Bulletin Editor Research Assistants Je bl we ee Allan H. Newbury W. F. Rollman Walter J. Gray J, A, JohnstonACKNOWLEDGMENT The preparation of this report has involved the combined efforts of many individuals over a period of several years. Tf the author has failed to make specific mention of any contributor he is none the less appreciative of his assistance. Credit must first be given to the original publication’ covering the early investigations of industrial property retirements by the author and Edwin B, Kurtz. The latter was instrumental in introducing this study at Towa State College in 1921 and in colleeting data on the first 52 property groups listed in Bulletin 103. The important ma- terial in that early publication is reproduced herein, together with a revised treatment of the original data and much new material. ; _ Acknowledgment for many helpful suggestions and wise direction is made to Anson Marston, former director of this Station, and to T.R. Agg, present director. To these two men, the author 1s ao debted for the valuable privilege of obtaining jnformation from their text Engineering Valuation.” : Suggestions on mathematical problems were given by Profs. B. R. Smith and G, W. Snedecor, Department of Mathematics, Towa State Coe Informal conferences with Jean C. Hempstead, assistant professor of general engineering, were helpful. : Ina andy of this aoa the thousands of calculations and ee tions are exacting details which must be handled with accuracy. TO the many engineering students and graduates of Iowa State College who at Various times worked on these burdensome tasks the author expresses his sincere thanks. Too much credit cannot be given Edwin R, Davis for his untiring zeal during the 5 years ne oes on this study. In addition to performing Tmany Ce oe a tions and maling special mathematical studies of the data, including curve fitting, he supervised the work of others, contributing a by his suggestions and personal interest. Harry J. Blazek performe many of the mathematical calculations in the curve-fitting aes Industrial and utility companies and others cooperated iy nishing data on the retirement of physical equipment. PrepWerey, Roster, and EDWIN, B. KURT: upife Characteristics of Physical operty.”" Iowa Engr. Haxp. Sta, But, 103. 1921. McGraw-Hill Book * Marston, ANSON, and T. R. Acc. “Engineering vyaluation.’ Co., New York. 6.TABLE OF CONTENTS PAGE Acknowledgment. a : 3 3 : : : . 3 Abstract. é : ‘ : ‘i a 3 * : . 6 I. Introduetion ‘ A = : 2 7 . : 1 Il. Analysis of Retirement Data to Determine Probable Lives 11 Definition of Terms. : : 5 : 5 : it Mortality Tables and Curves of Human Beings . . it Analyzing Retirement Data . c “ 5 . : 14 Individual-Unit Method . . . . . .) oD Original-Group Method . . . . «wo Composite Original-Group Method . ‘ 3 . 24 Multiple Original-Group Method . . . . 25 Annual-Rate Method is 4 e 5 : . ar Turnover Method of Determining Average Life . 35 Smoothing Original Survivor Curves . . : : 37 Calculation of Renewals and Retirements . : : 41 Comparison of the Methods of Re peane Probable Av- erage Life . ‘ at General Chaveanites 3 § § _ : : 47 Comparison of Specific Results iE S 5 . 51 Til. Characteristies of Survivor and Frequency Curves. 59 Classification of Curves 2 3 . : : : 60 Normal Condition ft - “ § : : 61 General Causes of Retirement % z : . 62 TV. Classification of the Curves into Types a . : 64 Formation of the 18 Type Curves : : . . 64 Curves of Unusual Shape... . 73 Final Values and Equations of the 18 Pye Curves . 73Vi. VIL. VI. 5 Characteristics of the 18 Type Curves we othe 76 General Shapes. - - + + * 7 Renewal Caleulations for the 18 Type Curves - 3 78 Normal Age i Capea 81 Practical Applications of the 18 Type Curves 82 Determining Probable Average Life of Groups of Units by the Survivor-Curve Method. ; é re 83 Probable Error in Determining Average Life by Compari- son With the Type Curves - + + °° 86 92 Determining the Probable Life of Individual Units Selection of Method for Estimating Probable Average Life 93 Appendix A Equations and Calculations for the 18 Type Curves 98 General Equations for the 18 Type Frequency Curves 98 99 Final Equations for the 18 Type Frequency Curves Table 21—Original Percent Surviving and Broa Lives for the 18 Type Curves She Table 22—Total Renewals in Percent for Type Curves 107 Appendix B ; Frequency Graduation and Curve Fitting 110 General Statements 110 Pearsonian Frequency Curves - iit Gram-Charlier Frequency Series 122 Gompertz-Makeham Formula AB Appendix C 141 The Original Property Groups and the 176 Curves te Table 27—Summary of Characteristics of the Original, Property Groups and 176 Curves « vieets Description of the Property GLOUDE S| OA betes ee F a The Original 176 Survivor, Probable-Life, a a queney Curves - iz é ; : , 150ABSTRACT In making engineering valuations and in determining depr ieee expense, the probable service lives of the units of Lae patie consideration are very significant. Though, in Depots a Tiable service lives are determined by various methods, the most rel ee are those statistical methods which take into consideration iy ae ment experience with similar property. This report prcneny pest methods of assembling data for constructing survivor curves bable which the probable average lives of groups of units or the DERE life of a single unit can be ascertained These five methods a Bae Survivor curves are compared with the turnover method o: mining average life. By a study of 176 s industrial property, cal equations were these 18 type curyes Property for which o: able. This method contrast to certain p matical calculations, urvivor curves representing many varieties et 18 typieal survivor curves and their nathan developed. A process is established w! ones can be used to determine the average life o oe nly a stub or incomplete survivor curve is Br i is simple, accurate, and quickly applied, a aa roposed methods which involve extensive ma During the study of the 176 curves, certain of their general char- nd fs a : % o- acteristies were isolated, and these are discussed in this report t 7: r iod gether with the caleulation of the annual renewals for a long perio of time as rep: resented in a property with unlimited life, Typical curve-fitting calculations using the Pearson, Gant Charlier, and Gompertz-Makeham formulas are presented. Bunevoe frequeney, and probable-life curves for the property groups studied, and a tabulation of Statisties for the curves, are appended.Statistical Analyses of Industrial Property Retirements I. INTRODUCTION The production costs and profit or loss from the operation of any enterprise making use of physical equipment eannot be determined without consideration of the depreciation expense which is dependent upon the service life of the property utilized in the production pro- cesses, Knowledge of the probable service life of physical property is especially important in connection with the regulation of rates or Prices by governmental authority. 3 When property is retired from service its actual service life is known. Up to this date its probable service life must be a predietion, but if this prediction is based upon the actual service experience of similar property in similar service the error in the prediction is apt to be a minimum, particularly when expert judgment is exercise in determining the probable service life. Ordinarily the probable Service life of property in service is required for arriving at the de- Preeiation expense, and therefore must be determined in advance of actual retirement of the property. By observation and classification of the ages at death of hundreds of thousands of people, actuaries have built up mortality tables by which the average life of humans and the expectancy of life at any age can be determined accurately. Similarly, engineers and indus- trial statisticians have assembled the life histories and ages at retire- ment of many types of industrial property units from which they are enabled to forecast the probable lives of similar units still re- maining in seoricg, he estimate of life expectaney for e single Bae or a small group of units may be in considerable error. _However, the probability of error is reduced when the service conditions of eS property are taken into consideration and evaluated by engineers & expert judgment in these matters, the estimate being revised from time to time as the life history of the property unfolds. Sele Accounting regulations, books on engineering valuation, as ane ty regulations contain tables giving estimated average lives for a : y types of industrial property. In the absence of retirement ee and experience definitely applicable to @ specific property,8 general tables are valuable in establishing a tentative Sante cn probable life for use in setting up depreciation change a ba properties. More recently, engineers and cost accountants } ave pe giving much attention to the study of retirement records as an aid a the determination of average lives. These studies take into consi ; eration the distribution of retirements as well as the mean age a which retirement occurred, thus paralleling actuarial mete ee therefore being far in advance of past practices. As these met io are further developed and information about them disseminated, they will probably be more widely used. ‘ fee This teport presents methods of utilizing retirement data to ae mine probable service lives, expectancies, and replecem ty = groups of property units and for single units. It shows that Oe tirements of physical property units follow a general mathema 4 law to an extent which permits classification of properties into typ of retirement distribution. as factor Salvage value is not discussed in this report since it is not a faci affecting average life, but rather one which is dependent upon a ditions at the time of retirement. Before depreciation expense a present worth can be determined, however, the salvage value mus' be estimated, ; the The researches presented herein were begun about 1921, and i first publication (Bulletin 103) was issued in 1931, Since the ee of this bulletin is exhausted, its important parts are repeated in this report along with material developed later. , s ___ Professor Kurtz published® the first 52 curves given in Bulletin 103, together with their renewal calculations and other important char- acteristics, particularly the grouping of the 52 survivor curves inte Seven types. These seven types were the forerunners of the 13 types 7 Bulletin 103 and reproduced herein, together with five additional ones, making 18 in all. The American Telephone and Telegraph Company has made sta- tistical studies of retirements to determine depreciation rates. In 1928 members of its staff presented a valuable contribution to the literature in the form of testimony before the Interstate rere Commission. So far as the author is aware, this is the first printe: reference to the use of the Gompertz-Makeham formula in dealing with retirement data of physical properties. The annual-rate method of constructing survivor curves and the turnover method of deter- mining average lives are also given, The United Light and Power Company of Davenport, Iowa, and the Pacific Gas and Electric Com- pany of California have used these same methods. *Kustz/Epwix B. “Life Expectancy of Physical Property.” ‘The Ronald Press o., New York. 1330. mmenhe Gate Charges of Teleshone Companies.” Docket No, 14,700, Interstate Commission, Wash TRI h 19-21, 1928, (‘Testimony printed by the American ‘Telephone and ‘Telegraph Gay" deer cre4 In general, however, these methods are little used and not well understood, primarily because of the scarcity of printed informa- tion about them. Also, it was not until 1909 that attention was focused upon depreciation as an item in the cost of production.* As public utility regulation, industrial cost accounting, and income and corporation tax schemes increase in complexity, additional stress will be placed upon depreciation as a production cost factor, thus increasing the necessity of determining the probable service lives of property units more accurately than js at present practiced. Furthermore, the probable service life of a physical property ‘unit is not a statie factor, It must be redetermined periodically if ac- ceptable accuracy is to be maintained. Production equipment undergoes very. rapid and continuous im- provement in quality and material changes in capacity and is con- timued in service or removed from service in accordance with eco- nomic conditions or management policies rather than because of its physical condition, Furthermore, in the case of certain equipment, maintenance practice affects greatly the average life realized, and, therefore, the experience of one company may. be greatly different from that of another similar organization. Thus, probable lives taken from published tables should be used only as @ general guide in establishing a reasonable range of expected life of particular properties. The reliable method is to maintain adequate records of service, installations, retirements, and inventories from which the service lives of the units of a specifie property can be determined frequently. A continnous inventory of physical properties is highly desirable. While the author strongly recommends the development and use of retirement data and survivor curves as the basis 0} estimating the probable life of property units, he does not mean to infer that expert judgment should be done away with jn favor of pure statistical treatment. Fach individual item, each group of items, and each property or company must be dealt with the light of its ee n, and its condition, its character and amount of service or productio ae relation to the present and probable future economic trends, art 0 manufacture, and management policies. Tables of probable service lives, type survivor curves, and statistical methods are simply means of recording past experience to use in predicting what the future service might be. *In 1909, vi fe i Water Co. Supreme Coat nina tak, va water, plant : hegins £0 epee ai in ee ony 1oment of its . Bef fi fo the questioy peter of Mes ne ect mam annually to DROVENG. RO Sop for Currey when but for making good the depreciation and Teplacins. the parts of the Dros property come 10 the end of their lite, ‘The company Ie not hound Meplacement. It 18 Sradually waste, without making Provision out of cammings fo invested fs kept unim- ‘see that from earnings the value 0! it rer ins sutitled to nee that from carnlnes (25 term of years the orsins! investment remaf as itwas at the beginning . . -”100 20 - (7 | 80 Average life. | Maxirmin Me 70 | A Ae a. Cxpectaricy GO | & Probate ire \ | S | bao K N ov x | V = Ss FO. Ble | WAS Ss w : S . ~ . | Mode. | ve 20 I ee | AY lo v ! WW | Sa «C | i | Ccisae- rip aes oe 10 Fig. O (a le 18 Age, years 1—A typical survivor curye and its derived curves.11 Il. ANALYSIS OF RETIREMENT DATA TO DETERMINE PROBABLE AVERAGE LIVES The following section deals with technical terms which apply par- ticularly to the statistical analy of the information from which probable lives of units of industrial property are determined from retirement records. Figure 1 is a graphical representation of the ap- plication of certain of the technical terms. DEFINITION OF TERMS 1. Original data refers to the records showing the number of origi- nal units installed, their ages dates of placement in service, dates of retirement, and other facts necessary to a complete understanding of the life history of the group of units or of the entire property during the period covered by the data. They are the data used in the caleu- lation of such tables and curves as those presented herein. 2. Bach of the property groups studied herein is composed of a number of individual waits. For purposes of calculation these units are usually grouped by like ages. _ 3. A property group is any group of like individual units compr's- ing a property or section of a property, regardless of the ages of the individual units included. ‘ s 4. An original group is a group of like units installed in serviee at the same time or at least during the same ‘accounting interval. Thus, they become a like-age growp since all units are of the same age. 5. In certain statistical treatments a property erouD © observed over a period of years called the observation period. Av observation period of several years is frequently chosen when using the annual-rate method of ealeulating a survivor curve. The observation date is the date on which the property is inspected to secure retirement data. 6. The age of a unit of property js the lapsed time from the date of installation to the date of observation. For a group of units the average age is the average of the ages of the separate units. od 7. An age-interval is measured from the beginning of one pero of observation (usually a year or other similar unit) to the Leger of the next conseeutive period. ‘The terms “at the beginning of tt interval,”’ ‘during the interval,” and “at the end of the Sa J are usually employed to avoid confusion in calculation. sue a An troublesome than referring to ages since units are placed in Soe of various times during a calendar oF fiseal year, and the oe eo Fah units in an original group will have @ spread equal to the cee ai age-interval. For calculation purposes, the units installe : Bethe age-interval are assumed to have been installed simultancot St dale middle of the interval and thus to have an #8 dating from the of the interval during which they were placed jn service.12 8. The service life of a unit is that period of time (or service) a tending from the date of its installation to the date of its si from service. While the service life of physical property is bets iy expressed in years it may also be expressed in terms of units of oe duction (screws, wheels, ears, pounds, miles, ear-miles), time units less than a year (months, hours, minutes), or combinations of physic: units or services and time (lamp-hours, ton-years). ra <6 9, The probable service life of an individual unit is that rene : time extending from its date of installation to the forecasted date when it probably will be retired from service. i ‘od of 10. The expectancy of life of an individual unit is that perio a time extending from the observation age (usually the present) to t foreeasted date when the unit probably ar He pees from service. Age plus expectancy always equals probable li e. fem Ad, This abehoge service life of a group of individual units 7 ve quotient obtained by dividing the sum of the service lives of all the units by the number of units. The average service life (in years) te equal to the area under the survivor curve in percent-years (or unit- years) divided by 100 percent (or the total number of units). eae 12. The probable average service life of a group of indivi a units is the average of the probable service lives of the units of the group. PAZ; 13. The expectancy of life of a group of individual units is that period of time extending from the observation age (usually the ae ent) to the average of the forecasted dates when the units probably will be retired. The observation age plus the expectancy always equals the probable average service life. Note: Service life and average service life are always known quantities since they represent completed service life; probable ser- vice life and probable average service life always must be estimated since they are forecasts of uncompleted service, 14. Maximum life or maximum age is the age of the last unit of a given group to be retired from serviee; it is also the age at which the Survivor eurve has a zero ordinate, or zero percent surviving. 15. Property units which are taken out of service for any Teason whatsoever are called retirements. Retirements may inelude original units (units of the initial installation) as well as ‘‘second-generation units, that is, replacements (or renewals) which were installed to take the place of the original units as they were removed. 16. Repla cements are the units put in service to replace retire- ments. . 17. Renewals are replacements “in kind’? which have exactly the same life characteristics as the retirements. 18. Installations are new units Placed in service, not as replace- ment units, but as additions to the property. 19. All renewals, replacements, and installations are placements. 20. Survivor curves show the number of units of a given group13 whieh are surviving in service at given ages. The ordinates to the curve give at any particular age the percentage (or the actual num- ber) of the original number which are yet surviving in service. The abscissa is measured in years or other suitable service unit. The original survivor curve is the curve drawn through the points ealeu- lated from the original data without adjustment. Since this original survivor curve is generally irregular it js smoothed to produce a smoothed survivor curve, sometimes referred to as an adjusted curve. Survivor ew have in some publications been referred to as mor- tality curves. However, the term survivor curve is used in this report beeause the curves referred to show the percent surviving, not the per- cent retired, and because the term mortality suggests human beings and not inanimate objects. 21. A stub survivor curve is an incomplete s' one which does not extend to zero percent sul'v) of retirement data on the longer-lived units. 22. A probable-life curve shows the probable average life of the survivors at any age from zero to maximum life. 28, Tf the pereent surviving is ‘ead at the beginning of each successive age-interval and the differences in these successive readings plotted at ages corresponding to the midpoints of the intervals, the re- sulting points form a frequency curve, oF distribution curve. Since the ordinates indicate the percentage of the units retired during each interval, the curve shows in what manner the retirements are distrib- uted over the period from zero age to maximum life. { _ 24. The point on the frequency curve having the highest ordinate is ealled the mode. The year in which the mode occurs is ealled the modal year, 25. A macimum-life cycle is a peri length to the maximum life of the units. An industria continue to be operated through several maximum-life of the units of which it is composed. 26. An average-life cycle is a length to the average life. : i 27. Ifa property is continued in service for a long time and main- tained with a constant number of like units of substantially the same potential average life, it will reach a normal condition ot stabilized condition, after which the average age of the units in service and the annual renewals will be constant year after year. a 28. Normal renewals are the annual renewals after the prope! i group has reached a stabilized condition. Normal renewals, an s a cent of the original number of units, are equal to 100 percent divi by the average life. ressed in 29. Generalized curves are those whose ordinates are ¢xP re ex- percent of the total number of units and whose abseissas (28e) ® pressed in percent of average life. vivor eurve; that is, ing because of a lack od of time corresponding in ] property may cycles of some period of time eorresponding in14 30, Type curves are those theoretical curves derived by the methods described in this report from a study of actual retirements. They de- pict typical survivor and frequency curves for industrial property. Actual survivor curves are compared with type survivor eurves in the process of determining probable average lives. MORTALITY TABLES AND CURVES OF HUMAN BEINGS By a study of population and deaths, life insurance companies have arrived at life tables for human beings of different nationalities. From these life tables the normal death rate and life expectancy for people at different ages can be determined as a basis for life insurance premiums and reserves. Life tables can be prepared from the vital statistics for any desired number of years in combination with census returns. By means of mathematical formulas a life table is adjusted to remove any slight irregularities that may exist in the original data. Table 1 is the United States life table for white males, based upon deaths for the 10 years from 1901 to 1910. Unlike industrial property Units whose average lives are continually being affected by many forces, the human average life and distribution of deaths according to age change very little over several generations. The life curve, how- ever, varies considerably for different races as is illustrated in Fig. 2. The deaths at different ages are shown for the United States by the frequeney eurves in Fig. 3. _ This reference to the United States life tables is made to show the Similarity between the life characteristics of human beings and indus- trial properties. The essential differences are three. First, human be: ings experience a heavy infant mortality which results in a bi-modal frequency eurve, one mode oceurring between ages 0 and 1, and the other between ages 75 and 76. Second, the mode at the age-interval 75-76 occurs at a much greater percentage of average life than is US- ually found with physieal property employed in industry. Third, the curves for industrial equipment vary in shape over wide limits while human mortality eurves vary relatively little. The Makehamized curve in Fig. 3 is one that has been smoothed. (It does not represent the same group of lives as the lower curves of the figure.) ANALYZING RETIREMENT DATA The foregoing section discussed the life tables for humans and the secompanying curves, Similar analyses can be made of the behavior of the Physical equipment employed in industry when sufficient in- tormation is available. 2 le. The processes employed for analyzing the re- tirements of industrial property are not so easily handled as are those ¥ data of human beings, nor are the restilts Us- ‘ause of the small number of units observed and the more numerous, less uniform causes of retirement of industrial15 Tastm 1—Lire Tasus ror Waite Maes 1901 ro 1910* Age | Of 100,000 mates | Annual | Expect= || Age- | OF 100,009 males Annual ‘interval bora alive rate of | ancy of || interval born alive rate of mortality) life || mortality ( eke | c ee d Probable ae Percent | life re- || Period Percent of life- | Number of those | maining ‘of life- | Number | of those Grebe: [SURE | Number | alive at | tocach || timebe-| alive | Number! alive st iron | atto- | dying | begin, | one alive | tween | atbe- | dying | begin oex: | ginning | in | nine | Srbegine || two ex- | ginning |, in | ning of act ages, | of — | interval | interval | ning of ||nct ages, ‘of | interval | interval | years interval |dying in) interval, years | interval dying in| | interval | years interval a) @) @ ® | ® 100,000 | 12,738 | 12. 1.818 2,634 3. 1,164 Bx 734 0. 535 | 0. 431 | 025 x 361 | 0 , 806. oO K 262 oO 3.193 230 0 3.432 211 o 3.704 202 0.251 64 65) 41,658 3.983. 203 0.254 65- 66) 39, 1717 | 4.292 214 0.267 66- 67| 38,279 1,762 | 4.605 231 0.290 67- 68) 36,517 1,797 4.922 253 0.319 68- 69) 34,720 1)824 | 5.253 282 | 0.350 Bo. 70) 32.896 | 1.846 | 5.613 B15 0.399 70- 71| 31,050 1,860 5.990 350 0.445, 71- 72| 29,190 1,877 6.431 387 0.494 72-73) 27,313 1,902 6.963 425 0,546 73- 74| 25,411 11925 | 7.579 454 0.585 JA- 75) 23,486 1,939 | 8.254 4 464 0,603 J5- 76) 21,587 11942 | 9.015 $. 466 | 0.608 Te Fa] to1605 | 1.922 | 9-803) 8° 469 | 0 616 FS Fal izes | 1,870 | 10-876 | f 471 0.622 78- 79} 15,813 1,797 | 11.364 3. 476 0.633 79- 80) 14,016 1,721 12.281 z 487 | 0.652 Be Si] 12'205 | 1.644 | 18-988 | Foor 504 | 0.679 SI- $2] 10,651 | 1.548 | 14-8 +7 519 0.704 82- 83] 9,103 1,429 ae 35 | 0.731 83 Bt) 7,674 ) 1,299 ae at | 0.762 S4- 85] 6,375 | 1.161 ee 575.) 0.797 85- 86| 5,214 | 1,017 a 507 | 0.834 86-87) 4.197 873 40 619 | 0.873 87— 88) 3,324 735 ee 643 | 0.918 Sa $9] 2,989 | 608 ote 651 | 0.949 so— 90] 1,083 491 a 673 | 0.975 0-91, 1.492 | 390 | S9-ceg | 2.75 680 | 0.995 gi- 92| 1,102 308 | 3-002 | 2.00 689 | 1.018, 92-93) 798 232 | 26-000 | 2.47 697 | 1.010 | 2: 93-94, 566 174 | 30-860 | 334 709 | 1.070 | 2 gi 95] 392 126 | Boe | zat 732 | 1.116 | 26. gs 96, 266 91 | 33-0e | 2.08 fot | tit | 25.41 || 98-97) 18 @ | gr 558 | 1-98 fos | iiasr | 24:70 || o7- 98} 18 Bi soam| 1-8 829 | 1.310 | 2 os 9o] 79) 2. | dt4o5 | 1-77 860 | 1.376 | 23. 99-100) 43 6 fyage | 1-68 s76 | 1.422 | 22. roo-tol] 28] 98) a5 .960 | 2-38 83 | 1.454 | 21. 101-102) 4 $) dsaio| 1-8 803 | 1.492 | 21.27 || 102-103 8 3 | 51.009] 1-35 mt 18) ae (em) a] il gae| is 1.585 i : fou | tesa | 19.21 || 105-106) 1 zee =f i ‘of Commerce, Gover woven, Janes W. “United St e Tables” ‘Table 8, Departme: a “ 66, it ment eee ae rhea Eile Table y16 100' iT 8 8 § § Nurnber of survivors, towsarndg & 8S 10 [| IN od — o SSeS o 7 O30 BO 1 0 90 100? Age, years Fig. 2—-Mortality curves for humans of different nationalities. Source of curve: Grover, Jams W. “United States Lite Tables," Department of Com- merce, Government Printing Office, Washington, D.C, 1921.17 401 T Ty Th) Hunters Makeharvized American Experience Table i i 10g ly=log k+xlags +6%l0g 9 jl MoT ty c-a0s579609 C1 z log 3 =QO00I296BE 1 | & log g =OOOW3ZOR CY 8 log k* ROBB TONG Tt z Average life 576 years mA 8 T THI HI to - a rT | & | r 1 SE a a Ch fit) se uf 25 ttt el | 12. . 7 Age, years x LI TL H X Vii tii | } 2 United Grates Life Table, | Weol 1901-1HO, for white males Ny) Survivors ar age IO=100f Fy 4 Survivors at age 0-028) s et arnt & 4 LT 1 | Average life = 50.86 year> Average iife = 49.32 year TY na} @ I | OES aD IS OO. Age, percertt oF average life tables, showing distributions oo y cur human life of Goins Frequency curves from hu der can cause the retirement heir physical condition and in service after they es of indus- Property. The facts that an executive or of large numbers of units regardless of thet shat om pressure causes units to be Gee wate ‘abl re physically unfit result in many irregu arities in lif Y trial ionerty that do not cuist in life tables dealing with Sere Nevertheless, by careful analyses of records of retirements ny 5 ees exercise of expert judgment, the probable lives of Sn 2 Oe Units can be established with some assurance. It is 1 ey Pl ap alyees. this report to present and discuss methods of making t ae ation Five methods of compiling retirement data for the ¢o ae a survivor curves, from which average life and expectancy Tife will termined, and the turnover method of determining ayeraEe ae each be presented in this report. The six mothods ae ee wa vidual-unit method, (2) original-growp method, ( aes (5) annual- nal-growp method, (4) multiple original-grouP -18 rate method, (6) turnover method." In some instances sufficient data may be available to permit compilation by all six methods and the calculation of the average lives of the property units, but the results may not be identical for any two or more of the methods. The data that are available often control the selection of the method to use, each being aceurate, reliable, and to be preferred under certain condi- tions. The results, however, must be assigned importance in aceord- ance with the known factors, such as time intervals and observation periods, and a true interpretation of their meanings. Of the six methods to be discussed the five first listed above are basically different from the turnover method. These five methods, however, do not differ from each other in purpose, cither in type of curves calculated or in mathematical procedure. Their essential dii- ferences lie in the selection of data and, consequently, in the specific units whose service lives are being caleulated. The advantages of the various methods will be apparent in the discussions to follow and in the section on the selection of methods on page 93. The following discussions and examples are intended to show the calculations accompanying each method and the limitations and ap- plications of each. The smoothing of original survivor curves is aii cussed following the explanation of the methods. The ealculation of renewals is given before the comparison of the six methods, be- cause the results of this caleulation are used to illustrate certain characteristics of the yarious methods. The methods are applied to survivor curves rather than to distribution curves because of the greater ease of calculation. Attention should be directed to the necessity of giving careful consideration in all caleulations to the handling of the first age-in- terval and the exact ages of the units regardless of the method or quantity being calculated. In general, the original data as compiled will give either calendar years or interval ages, or both, for the placements and retirements, and will have been observed on a defi- nite date over a series of calendar years. For calculation purposes the units in service and those retired must be considered concentrated at the average date or average age pertaining 10 the units of the same group (age). If the units are reported as being placed in service during a given calendar year it is logical to assume that the average date of placement would be at the middle of the year, or July 1, Consequently, the units would be an average any other presentation and comparison of the group methods. The annual-rate method has long been used in ‘Retuarial practice. He American Telephone and ‘Telegraph Company discussed it, and the turnover metho before the Interstate Commerce Commission in 1928, ‘The National Automobile Ghamber of Commerce (now the Automobile Manufacturers Association) has used Of automotion age, Since 1926 (possibly before) in determining the average Ii Saautomobiles. The author has discovered that the other methods of analyzing of treating flood-flow dats P2Ye certain characteristics in common with meth19 of Y%-year old Jan. 1 the following year. Similarly, if a group of units is reported as being retired at an average age of, say, 7 years, the individual units must vary in ages from 644 to [TY years, all of the group being in service at the beginning of the interval 614-1 and none in service at the end of the interval. From these facts and assumptions the first age-interval used is pene 0-14, subsequent intervals being Yl, 135-216, 216-342, ete. Individual-Unit Method _Frequently, available data show only the number of units re- tired during a given year or series of years together with the age of each unit at its retirement (Table 2). Tf these several retirements are arranged in order of their ages and then summed from the oldest to the youngest, a survivor curve (Fig. 4) can pe plotted from the successive sums. The resulting curve as usually plotted shows the percentage of the units continued in service to any given age. It should be noted that neither the method nor the original data take into account other units remaining in service during or at the end of the observation period; every wnit considered has been retired. Thus, the average life indicated by an jndividual-unit survivor curv? is exactly the average age at retirement of the units given consid- eration, Consequently, no curve need be constructed to secure this average age or average life since it can be calculated by dividing the total service in unit-years by the total number of units retired (Table 2, column 3). ae Since all units considered are retired from service, an individual- unit survivor eurve will always range from 100 percent surviving at zero age to zero percent surviving at maximum, life. h For a property long continued in service and maintained at the Same number of service units by regular renewals, the replacemen’s having practically the same potential average life as the retirements, the survivor curve, the frequency curve, and the average life ia determined by the individual-unit method will approximate wee determined by other methods applied to the same property: ne situation is not comimonly encountered because properties a! as quently expanded with installations ; further, the replacements ha e neither the same potential service life nor service and maintenan’¢ conditions as had the retirements. Hence, for properties contintitt in service for a long time, a method of determining averag” 7" which takes into consideration the units remaining in service ¢ a ing” units) as well as those retired (‘dead”” units) is at The main objection to the individual-unit ‘method is that it doe give weight to the units still in service. : As is ce with all methods of compiling data for SOFT YOE Seen care must be exercised in interpreting the original data w"20 296°01 ‘ont oma \ 080" oot mod, og: 0070 00'0 0070 9 0 Hee ° ° e 00°16 og-0 aH°0 20°T & & 1C-B406 ow z i 99°06 ort werk eat g 1 Soe cd 1 0% 99°07 ied ge'r Be g ° S461-H4at ° 0 or 66°61 OFS ¥8'T Le ¥ T SI-B441 8L T Eg T2'8t 16'S 06°2 69'S 2 & 121-91 19 g a 06:21 OF art ee or g ‘O1-SioT SF g 9 T9°9L ve 8e'L 8F6 SL 8 Sis1-H¥1 rag 8 st yerst ¥8'L 96°8T eS se a F181 4 at + 80°F 80°S 16:8 88:16 a a eta 16s at st 00°#1 09'S we1s 26:58 19 ig Set-HIL ost ot aL 1G'e1 LS 0o°TF 06°26 16, % TI-HOL 798 ¥e uw Tat ws 89'S 2°69 eer aS 01-6 oly a or 09°11 ore eo°2L $2798 sor 1e 6 68 one 1 6 86°11 81:8 82°06 82°96 est ot 3 54h eet or 8 Oe I One 7096 18°96 st T iL 549 Z r ZL aut 29'S 89°96 ¥8:96 8st t 9-549 9 1 9 Ti 19°9 98°26 63°26 9st & a Bie or z g 00°11 oe'L 89°86 27°66 ost g + He at g F 00°11 0's 2°66 1°66 681 0 @ 52 0 0 g 26°01 oh'6. 2°06 00-001 ig rt 3 HT z 1 zg 96°01 gP'0T 00001 00°00T ost 0 1-40 0 ° sf 86°01 26°01 00°08 00° 001 oor 0 0-0 0 0 o aD (oD) (8) @ @ @, @ @ @. @ xvod save Teaaoyuy ead “quasojur Jo eae jo eim0k-9 guessed 00 saunp sxe0k yeas 3 rays sqeasonttt painer syearoout sau0s Tonean | ‘peaouros Ree ie S mare || geet, | Bowe | “eae ur syram jo. | ut sqpim yo eorkrog | peasoquy yo Burruywoq ye | | [ours ont aTquqora | Aouvjoodxcy sjyun TeupsrI0 Jo BIOALAS woamo ofy-orquqord oun oxquqoxd pus epqourjaedxo Jo WORETMOTED soapaane jo uownoqee ao} portundzo WAY TPIT ano} #6 wep IUHO (eqmomasjoz QTE ‘seNs9r) OURS Pus ord ABMTTOH) COMMS LINQ)“IVAGIAIGN] SHY XM VIEVCT TYNTOPEO, 40 ENGWALVEHL, TOTES L—Z TIEVL—— tirement, the average period ( of the year of placement to the middle of the year of retirement, although the actual period o ning of the year of placement to the end of the year of retirement. The explanations w! é method of compiling data for the survivor and probable-life curves for the railroad pile and frame trestles treated in curves 160 to 169 Appendix C, page 175). Th k 21 emphasis placed upon the dates and ages of placements and retire- ments. Frequently, data are reported in a form showing that a number of units were removed at a definite average age, Say, it years; it must then be assumed that these units were actually re- moved between the ages of 614 and 71% years. In case the informa- 1 tion gives the calendar year of placement and calendar year of re- RO if | Average life = 1025 years 2 14 5 R1 | le i | |\s | en * ‘ & iS ez Ste r \ s a 40] Ne z WO 5 a | 20) Ferivenmerts pote rz) e € 4 SS ie ee ee Age, years Fig. 4—Individual-unit curves for survivor and _ probable-lite {Ta0' pile and frame trestles retired in 1910. Zo ee of service would be from the middle f service would extend from the begin- hich follow illustrate the individual-unit e illustration deals with the 190 units re-22 tired during the one year, 1910, but the method is applicable to re- tirements made over any number of years. Columns (1), (2), and (3) of Table 2 give the information about the life of the trestles as it was received, and columns (4) to (7) as it was arranged for calculation. The average life of 10.95 years was ealeulated by dividing the total service of the group in trestle-years by the number of trestles. Tt will be shown that the area beneath the original survivor curve (Mig. 4) will reduce to this same average life. It will be seen that the age column in Table 2 has been changed over to the age-interval basis (column 4) and made to read in 1-year intervals, starting on the half-year. The half-year basis is adopted in accordance with the previous assumption as to average age and the starting and ending of service since the data were reported by calendar years, Column (7), showing the percent surviving at the beginning of each age-interyal, contains the values from whieh ine original survivor curve (Fig. 4) is drawn. Its caleulation is eve dent. ae The total service rendered by the 190 trestles is indicated by the area below the survivor eurve of Fig. 4. The service remaining @ any age is equal to the area under the curve to the right of the ordi- nate erected at that age. These service values are shown in Table 2, columns (8) and (9). The expectancy at any age is a function of the remaining service which is obtained by summing the areas for each age-interval, starting at the age of the last survivor (zcro per cent surviving) and working to the left to the age in question. The areas for these several intervals, or partial areas, are equal to the average pereent surviving during the interval multiplied by the length of the interval—1 year or fraction of a year as the case may be. The average percent surviving is obtained by averaging the per cent surviving at the beginning of the interyal with that at the end of the interval. This approximates the true area. The expectancy of life at any given age is then obtained by dividing the remaining Service (column 9) at that age by the percent surviving at the same age. Column (10) of Table 2 ives the expectancies. . The probable average life of the survivors at any given age 18 equal to the sum of the expectaney and the age for which the ex- Pectancy is computed, The values for this example are shown 1 column (11) of Table 2 and by the probable-life eurve in Fig. 4. _ An examination of Fig. 4 indicates the original data plotted into curves of irregular shape—a typical result usually obtained by any method of compiling original survivor curves, These irregularities correspond to the differences in wear, replacement, economi¢ in- fluences, and management policy which industrial properties expe tience. Also, irregularities result from the relatively small numbers of units studied. In order to simulate the more even characteristics which would be recorded with large numbers of units and regular23 and consistent management policy as to maintenance and replacement, the curves of Fig. 4 can be smoothed by one process OF another. Since this smoothing process is not necessarily related to the method of constructing the original curves, its discussion is presented on page 37 for all methods. Original-Group Method _ If the number of units placed in service at a given date (or dur- ing a given year) is known, together with the number of these units remaining in service at successive later observation dates, a survivor curve can be constructed covering the experience of this original group over the years for which the data are compiled. The curve will extend from 100 to 0 percent surviving only in ease all units in the original group have been retired. Should the number of units remaining in service for the first few years following installation of the group not be available, the curve will have a gap between zero age (100 percent surviving) and the age for which the first observation isknown. The indicated average life applies solely to this particular original group and disregards all other groups of units in service or retired, The method also applies if data are available showing the Tapte 3—Tyrican Treatment or Ontcrnat Data BY THE Onieiwat-Grovr Merion (Railway pile and frame trestles, 1910 placements ‘of 112 units) Survivors of original units at Age-interval, Original units retired ‘beginning of age! years during interval, =|, Percent @ @ ® 2 9 1B 10:00 0 112 00 1 ua 99.11 5 es 94.65, 0 105 93.7% 93.76 é 105 93.76 0 105 93.76 8 103 90.25 é 101 90.25 3 101 87.67 1034-11 0 98 87.57 14-125, 3 98 34189 1254-13: i or 34.00 13-144 2 = $2.21 Vbg-1536 5 ee 175 1544 87 12. 30 ian 7 ae eek rts 7 7 58.10 1834-19) 10 ie ee 1934-20, 6 s 49.75 2034-21 49 41.13 9 21h¢22! = a24 annual retirements from the original group, which, in effect, ee same as giving the number remaining in service provided the original number installed is known. oe of To determine the probable average life for an original group | units requires that the retirements be known over a period of ‘cv sufficient to extend the curve so as to produce reliable ee Tf the curve reaches zero percent surviving, the area under ‘ curve will give the final average life; if the eurve does EE zero, it will need to be extended (in some ea: in both dere in order to determine the probable average life. If all the ee ek retired, the results will be the same as secured by the individual- unit method applicd to the same retirements. 3 . The original-group method uses the data obtained by obeeryate single original group over a period of years and takes into ood eration the units yet in service as well as those retired from ce The individual-unit method can be applied to retirements only, a they may extend over a period of any length, and they nee oon from any number of original groups; however, the ori ate method deals solely with one original group. The original oie method is valuable in detecting the change in probable average li of the units for different construction years or types of design. hoa Table 3 and Fig. 5 give a calculation by the original-group me! Hed as applied to a group of 112 railway pile and frame trestles insta ue during 1910, From the nature of the calculation it may be observe that data which applies to any portion or portions of the curve Be be had in original form, The only information necessary for an on mate of the probable average life is the number of original ae the group and the number remaining in service at_ sufficient a ee dates to allow completion of the survivor curve, either from an tinuous observations extending throughout the life of the en - : eroup, or from enough observations such that the curve may completed by extrapolation and interpolation. hat Methods of extending or completing stub survivor curves, so t 4 the area may be estimated and the probable average life determine 7 are discussed on pages 39-40 and 83-85 since this process is conn to all stub curves, regardless of the method used to calculate t . eurve. The expectaney and probable-life curves are calculated oe actly as in the indiyidual-unit method by determining the area be neath the completed survivor eurve for the several age-intervals. Composite Original-Group Method When the number of units in an reliable or when the retireme: survivor curve, more than one vivor curve established igi i to be original group is so small as mts do not produce a satisfactory sroup may he combined and the sue by the composite original-group method.This method is especial- nieve ly desirable when the several original groups were installed during a series of consecutive a4 years. x. No example of the be Bs 1 9 z mae calculations is offered since the method differs from that of the origi- nal group only in the combining of the origi- nal groups into a com- posite group, which, in the final analysis, be- comes one large origi- nal group, The units surviving in each group must be combined for equal ages, and the per- eent surviving caleulat- ed on the basis of the “ combined total of the original number in each a 9409 «He 3G 4D group included in the eo eee ee 16 nob yours for 112 survivors a ar- . ; 4 survivor curve for ticular eer ety pilecans 5 Originsics installed in 1910. ears prvi eee & S Multiple Original-Group Method ; i several Tf the original-group method be expanded eo ond original groups placed in service over a long succeMh 1 A < time the period of observation condensed to @ definite d Hee eae the number of units in each original group eT . known, a survivor curve can be plotted, each origin ‘as the multiple ing one point on the curve. This method = a group and a original-group method, Instead of a single orlg method, a series series of observation dates as in the Sane ee utilized. of original groups and a single observation Cate an daar SUPA: The resulting survivor curve will range from . vest group ing to zero percent surviving only in case all at ae ea It are yet in service and all of the oldest group ie ‘were made by the frequently happens that no installations of unit o Se aanding! (8 company for certain years, and thus, for the age26 these years, no point on the curve would be possible. If not all of the youngest group remain in service, the curve will need to be ex. tended from the age of this group back to 100 percent surviving at zero age. This will usually be the case if no installations were made during the several years just preceding the observation date. Gen- erally, the points will not follow a smooth path because the percen- tage of one group surviving is frequently larger than that of the next younger group (Fig. 6). f The multiple original-group method takes into consideration the units yet in service as well as those removed from service. It is to be observed, however, that the method does not give any weight to the rate at which the units were retired from any one group since nothing is known about the number of units retired any one year; it is simply known that there is a certain number of original units Tamm 4—Tyeicat Trearment or Onromar Data By THe Muuriene Onramat-Grour Mrrnop (Railway pile and frame trestles, 1901-1931 installations and replacements) . Year Original units in- hes ee installed Stalled during year | Jan. 1, 1932, years Units a ® ® @ 1931 or 1930 M4 8 ik ee &7 244 87 1028, 103 31g 103 Ea 96 4g 95 62 5a 62 1925, 1924 = ne 3 1923 By ae +4 i a 4 2 26 104 22 1920 1919 a 11 52 1918 o 12 41 a 2 ee 7 15} 63 1915 ioe 43 164 25 aon 1913 134 1% a 60.48 1912 a 1814 B 3 1911 150 me t 13:83 1910 112 ‘ 1909 2114 46 41.07 = 8 Ba 8 ae Dai 23.40 aay 2% 25: 0 26.09 i 1908 Be 261 29 29,50 1903 tos a7 a2 30.66 ‘1902 166, 28 7 6.86 1901 iss 29 u 6.63 30 at 16.7627 of each group remain- “ | ing in service on the | observation date. e Table 4 and Fig. 6 il- lustrate a calculation by — 40 the multiple original- group method, using as an example the same railway pile and frame 2 | TanInnS 4 trestles used in the indi- vidual-unit and origi- nal-group methods, but chosen for the years and groups which illustrate the method. Once the curve is completed the probable average life and the probable-life eurye are determined by the method illustrated un- 7 “| der ihe individual-unit method. Extension and ° eed EAE smoothing of the curve eee seiyeart are also the same as for Fig, 6.—Surylvor curve: ‘method for pile and frame the other methods. {501 to 1981. ‘gaat? 8 Percent surviving ‘% S 8 tiple original- by ne, treaties installed Annual-Rate Method name from the fact that the rate e its mee : The annual-rate method takes its Tgge group of units in service of retirement is calculated for each f f during the observation period which includes one oe ae Caleulation of values for a survivor eurve by this me a period two sets of data: first, the number of units retired Se ee Hacion cf observation and their ages at retirement (the aoae number of as required in the individual-unit method) ; secone, eriod and their units in service at the beginning of the Ck aT aaa ig caleu- ages. From these two tabulations the rate oe casas in service. lated for each age corresponding to the ages 0° Oe ont it is gel- Since the rate is usually ealeulated for a year ee of the units erally the annual rate, or, in other words, the a certain year which of a given age in service at the beginning 0 etic beginning of the were retired during the following year. Tf, al ‘ts installed the prior observation period, the data include the wy: yates for each age- year and each successive preceding year, annu!28 interval from 0-1 to the age of the oldest unit in service will result. Tf these annual rates are then applied successively to the percentage surviving at the beginning of each age-interval, starting with 100 percent at zero age, an annual-rate survivor curve will result. These annual rates normally increase as the age increases, and, if all of the oldest units in service are removed, the last annual rate will be 100 percent. The survivor curve in this case will range from 100 pereent surviving at zero age to zero percent surviving at maximum age. However, since in most cases the data are quite irregular, the annual rates will show only a general tendeney to increase and will fluctuate up and down, Frequently, the survivor curve will be a stub curve not reaching zero because not all of the oldest units observed were removed during the observation period. The probable average life (obtained by the usual method of de- termining the area under the completed survivor curve) for survivor curves constructed by the annual-rate method is a reflection of the average rate of retirement for the observation period chosen, It takes Tanun 5.—Tyrica Treatment or OrtcraL Dara BY THE Annvat-Rate Muriop (Railway pile and frame trestles, 1910 retirements) Age Number of units | Ni i Surviv interval, Aniertica webee| secren aoe. og peshnatng of ie years ginning of interval) interval percent terval, percent ® @) ® @ © 0% 12 0 0.00 100.00 ay ~~ 0 0.00 100.00 oie 3i 7 0.95 100.00 ae ay 94 0 0:00 99.05 11s 3 2.61 99.05 4 5M o7 2 2.06 90.46 aie 814 19 1 = 0.78 94.47 re | oe | 8S aie Be is es 18:10 22-70 91410 288 41 at bos 104-11 231 24 ce on i ag | 48 ited a i 21.52 ao Wis-154 5 $ ins 76 wear “4 3 12.50 22.89 Wig-1sig ae 3 15.79 19.97 1834-1914 20 i a7 1 1055-2034 19 1 8:38 1012 2034-2134 : : BERG i ; 48 ne Buds ; $ 0.00 11.88 a a 6 0:00 iss Ea 7 $ 0.00 11.88 0 ° 0:00 iss29 into consideration not only the current retirements (‘‘deaths’’), but also the units remaining in service (the ‘‘living’’), and utilizes them in accordance with both their number and age. Such a calculation results in a true picture of rate of retirement since it includes all units involved and their ages. In effect, it takes into consideration the prior retirements because the annual rate is dependent upon both the age and the number of units in service. 20 0 _ & 3 ie 1 5 B Percent 8 1 40) e & piers ha ope a 4g oO 6 ¢ 6 810s BGO 2 Ge 4 OB Age, years Fig, 7—Annual-rate survivor curve for 190 pile and frame trestles retired in 1910. 7 for The annualrate method is not applicable to property groups : which alnctehta were not made for continuous Bion chert with zero age. The first annual rate must be applied to ae re is no and if this rate is for an age-interval greater than tee eat of way, other than by assumption, of determing the sta. er aH the curve. This objection is not a serious one for a case 030 would exist only when the type of unit had been discontinued Be Years:previous to the observation period. In such cases, se aoe the beginning of the curve can be assumed by reference ol z curves for similar property, or better, determincd as suggested on e 97. ? a many applications of the annual-rate method the xe for any single year may not reflect normal conditions of t ee erty, but a series, or band, of years may be chosen in order 0 oe average conditions. The units retired for each respective Bs an the units exposed to retirement for each age over the band of years are totaled before the annual rate is ealeulated. For small property Tate 6.—Remimenents or Pruz anv Frae ‘TRESTLES FoR 1901 To 1910 ARRANGED For ANNUAL-Rate Metnop Year Number Nurabe constructed | constructed -—— Sng year | 1901 1904 | - = oc i = j 12) a @ ® 1 || @|@)@! & | ao | an] ay 1872 nu | 2 ol} a Ses ees 1873 1 ce oe aM al sen 1874 5 aot J = 1875 2 a fry =a 1876 29 = menlaeitasrd es ht 1877 7 — cOMueT etl) oa| eee oles ap hepa |2 |= |=l212 Spee PrN Nim hear | Se = 1880, 213 1 eee beeen S|: ese | ie 1881 595 1 eamlera beast (Mer pS Fae a8 a see 410 1 Sele eset ec| tae ae 1883 189 3 Dee OT. oOo ole 188¢ 318 2 ol 4 2 1 i 1 a 1885, 152 1 0 1 2 1 al rg omens 1886 377 2 2 2 6 3 0 eS 0 1887 209 9 4 0 0 oO o y 1S83 a7 3 Peebles fe ari oe tag 2 1889 437 | os paeaiieta| e212] 98) 2 he 1890, 462 31 3] 3] 2 1 0 a i] oo 1801 we | 28 pene iratt eo] vo | 2.) 2 1s02 204 (2) 38 is} os] x] 2} 27) 4 1803. fe | 2i 4%} a] sto] o) g| 2] 8 3 1S04 15 oj $/ 2] 2] | 2] 7] & | 2 3 1895, 246 ae ae oe. a8 | 88 [28 =| a 1899 ioe 3 10) 8 | 23 | 19 | 21 | 14 1s97 181 2 oO me |e |e) it] fey 4 1900, 319 713.1 2 rt 1901 185 oO 1 0 3 1 1902 166, 0 1 * 1903 loz 0 2 i t o 904 137 0 1 1 1 - 1905 98 OF] Lo |P econ tite 3008 15 Oo} of of] of 8 4907 94 2 m | 8 "1 3) 3 3 1910 12 Po31 groups and for years of uneven retirements and replacements a band of years is preferable. i Table 5 and Fig. 7 illustrate the annual-rate method as applied to a single-year observation period and the same retirements of pile and frame trestles in 1910 as used to illustrate the individual-unit method. The calculations need no explanation, perhaps, other than to state that the annual rate of 0.95 percent for the interval 114-214 was subtracted from 100 percent to determine the percent surviving at the end of the interval. The rates for the first two intervals being zero, 100 percent survive at age 1% years. Likewise, the zero rate TABLE 7,—Pite AND Frame Tresries 1N Service Eace Year, 1901 To 1910, An- > For ANNUAL-RaTe MetHop Xear ining in service Jan. 1* construct aby — — sy during year 3905 | 1906 | 1907 | 1908 | 1909 | 1910 @ @) @®|a@) eo] o | @| @® | @ | ao | GD | ay 0 o 1872 iw 3 1 1 o 0 oO oO 1s73 1 a) 8) 24 a Boe te et et aeoreee ae 5 0 | 0: | 0: din Oc) Ob) Ol OST Oa hea 1875 2 O)| 8 | 0 [eco On)e ror] er Sul seis Delia 1876 29 0} 3] 8] o| of] o| eo] o o 1877 | o ° o 0 0 0 aoe 2 2 Pe Sale Soe os |e Son es on eee tee ta 0 0 0 0 0] 0) JorO.. [ok Oaa Raa ease = 2} 1o)-o |) On| 208 |) SOR aRO shee ee ena sa 1 | > oot op} CO Ot on tacoma tanaG, o o 7 2|/1{ 0] of] Oo] 0 ee SS) ab bial ote fepea aera ene eee Aas 325] 202] Boh Sc Roe oot ae 3a, 8 7 5 5 | 4 2 Dole : sR 2g | 22 | 20 | as | 36 | 20) 7 3 1 tee 7 Bo ae ale ae dee . en) 0 | 2% | a | | wz fis | w]e] | ie o. | 3a] a1 | a | 38 | is Bis eda 2 3 | 45 | a2 : 1801 We | Gb | ge | Se | ar | 25] 28 fee) 5 1 | 2k 3802 163 | a | az | oz | a7 | 38 | 38) B 3 So. 4808: 112 | 90 | 76 | 50 | St | 41 2 | 2 | oe | 26 re a | 82 155 | 103 | as | & | 1896 19 | 335 | 18 | 95 70 a0 es | 150 | 183 | 8s | 300 1808, 206 | 206 | 202 1 3a | 231 3809 287 | 28x | 282 303 | 288 1900, aig | 318 | 316 | 315 373 | 175 1801 iss | 185 | 184 | 184 1902 166, 1 166 | 165 1903 102 8 | toe | 302 134 1904 137 137 38 1908 us a5 | 115 | 115 | ¥ ; ot ee os % | 105 | 108 1908 105 1909 03 1910 12 ‘constructed *The number of units entered as remaining in service for the year during “0h. 'ntmber remaining in Represent potal m its constructed di the i Bervice Jas 1 of Haat ey, Shtuther enttios apply to dan. 3, 88 sncieated.32 for the interval 244-314 does not lower the survivor curve. The next annual rate (2.61 percent) is multiplied by the percent surviv- ing (99.05) at the beginning of the interval (314-414) to which it ap- ples and the product (2.59) subtracted from the percent surviving (99.05) at the beginning of the interval to determine the percent surviving (96.46) at the end of the interval. This process is con- tinued until the last annual rate is used. If the annual-rate method is to be applied to a series of years, the retirements for each year can he arranged as shown in Table 6, so that the retirements in a “‘stair-step” line extending down and to the right are of the same age. The units in service at the beginning of the years 1901 to 1910 are arranged in the form shown in Table 7. TaBie 8.—Trearweny or Survivor Dara gy THe ANNUAI-RATE AND Inpryipvat-Unir Merops Railway pile and frame trestles, 1901-1910 retirement. period) SEnee Tate wewiod Individual-unit method itr Units in yeaa’ | Unite in, | Uniteretired| Annual | survivors at |_sorviee at _| Survivors " years service at | “daring rate, | beginning of | beginning of | beginning o beginning of | interval | percent | interval,” | “interval. | interv is 2 percent | (2 column3)| percent 2 ®) ® © ® ® cat $ 9.00 100.00 | 1,485 100.00 180s - 0.21 10000 1/465 100.00 11096 z 0:09 99.79 1/462 99.30 a8 > 0.29 99.10 1/481 99:08 ee ae 0.96 98.81 1,446 98.7. a 48 2161 07:86 1429 97.55 rc 5 hg 1 1,381 94.27 Us bs 2.75 Bear 1/353 92.36, 18a 50 5.18 91.36 1800 88.74 17080 my 9.68 86.63 1,202 82.05 Spey 263 15.94 78.24 1/022 69.76 ae oo 19.53 65.77 759 51.81 be ite aren 52.98 516 35122 550 ae 21:55 40.30 312 21.30 380 oo 16.67 31.62 198 13.52 ae Ge 9.28 26.35 138 9.43 i% a ae 179 130 21 12/35 apes aa oe 108 o 10:07 eae a a ; i tor 16.30 51 3.49 7 a 15.71 13.69 34 2.83 3 au 23.26 11.54 3. 1.58 it i oe.es 8.86 3 0:90 rf I rit 6.47 6 0.42 i a min rae 8 Oe y mt Bees 4 0.28 t S 25.00 5.23 yas ; 3 0:00 3.92 3 0.21 i 2 we 3.02 3 0.21 : 3 ed 3.92 3 0.21 2 eS 1.31 i 0.07 i 2 0.00 a of 8 | ma | te ste ka oe 0:00 } §:0033 Here, again, the num- 02 hers in a ‘‘stair-step’’ line extending down 20 = and to the right repre- | | | 2 eee sent the units in service 60 SGA Ta aUBE having like ages. If the ac ee » overage life retirements in Table 6 (ESE ee — are subtracted from ta ir corresponding or- =| iginal groups (column S60 Annual-rate survivor: 2), the results are those Hal ste eee shown in Table 7 as the & ,,| 4% |__ Bee Me = number of units from ‘ ! each original group, § ' that remain in service iT Jan. 1 of later years. In | other words, Table 7 is epee the number of units sur- ; | viving on succeeding in Nt ee yearly intervals for eG 1 each original group. ! The survivor curve 10 1 1 eae desired is one that ex- | i | = Presses the average ex- o| Gos ee ite, ee perience of retirement Ont Aa Ages years aves period 1901 to 910. The annual rates < pate an then must be caleulated or ie eas “he an for all the units ex- 1901-1910. Posed to retirement 4 : ’ rate must (‘death’) during the 10-year period. Since the ene to deter- be expressed for units of definite age, it is first aes beginning of mine the number of units of cach age in service as Likewise, the any year and then sum these for the 10-year aa termined for the total number of units retired at each age must be det T i | aading 10-year period. These two sets of values are 0! At series froma the the figures in Tables 6 and 7 for the proper See tnee the figures upper left to the lower right in the tables. For > abe 6 add to 53 in the first row above the heavy diagonal Be th and TY or at an units—the number retired at ages between fable 7 gives 1,928— average of 7 years. A similar summation hee ears for each of the the number exposed to retirement at age ae obtained in. a like 10 years. ‘The sums for the other age-interval ‘ations and the eal- manner. Table 8 gives the results of these for the 10-year period. culation of the annual-rate survivor curve The curve is shown in Fig. 8. al-unit surviv~ 4 nme trestles retired34 ] ] eeor aea's ceo'e 181 ost TO6r 80 29. ToL g08's ogg'¢ z0¥ ore oO06T ost FI Oger gue 2818 268 88% 66st sit 48, 8261 68 Z ex's #83, 406 S681 eer or 861 ses‘a ra oz Ist 2681 Tat 66 2861 oue'% 68'S iad ¥OI S08T a £0 9z6r £20'S 660° 60g ge So8T wh £9 Se61 i890 ougtT 62 sor OST 6 se ¥e6T 169'% 2BL‘T FL ser ost oF ¥% 2661 €e9's 299'T oer ee, e681 08 Te seer 259'% 218'T ag out Tost 08 9% TEOr ¥99's 68 our Or 0681 68 £9 Oc6r 1699'S 2cF ore dey e3sr 6g 9¢ 6L6r re! 808 SFL ue Seer ug 6 SLOL TLV'S £83 $2 608 2881 98 ce ZI6L 99r'z TOL eer ug osst 69 on 9161 £00'% ee oF eer oss we er Stor 84'T or 98 ae 7881 TOI 08 FI6I T09'T 6 ZL ost dg 3 6et ¥er eT6t 66r'T r g oF es8T eel er ar6r 509 0 1 6g Test 06t ost U16T cor 0 0 813 O8sT 06t Sit oer 9c ° 0 Sar zs err £6 606T SEI 0 0 S81 gust Let sor 8061 6g ° 0 7 ust Ir 16 2061 og ° 0 6c oust er sit s06t 81 ° 0 er ezgt ToL 86. £06 81 oO o $ rst SFI 281 #061 a 0 ° 1 281 Ter BOL £061 L 0 0 3 Beat ser 991 z06r 0 = 0 = T ust ap ov ) @ @ (9) ® @ @ wo W98 Jo awak JO wok JO anak 30 Buysuoq 0; | aves | BuruutBoq 03 | _rv0k Surunioq oy | anos | Surumntaq on | _au0d pojeiumoos | saume | porspiumoas | smc poiupimmooe | suze | peyepinmoos | suunq time | squomremoy | ‘spuomourg que | symouemnoy SUOMI eoases |__| faseae a9 soars | | |—_—__—_ wok, uy poser payonazeuog eo Pemeu povonsysog fopver3 Jo soqumny serisox} 50 soqumyy (ZEOr 1 TST oo1As08 ur sopsoy ourNT; pu ofId vse) SUI] SSVAGAY ONILVINOTVD JO GOLA YIAONUAT—'6 aTAV],35 For comparison, results by the individual-unit method for the 1,465 trestles retired during the 10-year period, 1901-1910, are shown also in Table 8, with the corresponding curve in Fig. 8. Turnover Method of Determining Average Life In a property for which the yearly placements and retirements are known, an average life ean he determined by the turnover method. The method, however, does not result in a survivor curve because ages of the retirements are not used. The average life determined will not be accurate unless the property has been continued in use at least one or two maximum-life eyeles, unless the replacements have about the same potential life expectancy as the retirements, and un- pee ite property is maintained at about a constant number of service units, In Table 9 are shown the placements and retirements for each year, 1871 to 1932, for the railway pile and frame trestles previously selected. In columns (2) and (4) are shown the yearly changes in units which are accumulated in eolumns (3) and (5) to show the total construction and total retirements of trestles to the beginning of each year. These accumulations are plotted according to years in Fig. 9. The turnover period, which is taken equivalent to the average life, is given by the horizontal distance between the two curves. In reality, the average life is assumed to be the number of Years that it would take to accumulate retirements equal in number to those units in service at any given date; it is the period of turn- over, or the number of years ago that the accumulated placements totaled what the accumulated retirements total today. If the ie pees cereus the same horizontal distance apart, the average “%¢ 1s unchanging. rs Tf the a retirements and placements are not ayailable se the date of the beginning of the property, the turnover method » estimating average life can be applied to the years for whiel 1 5 ata are available and the method successfully worked just a 8 as the retirements for a continuous period will equal the num! vi a units in service at the beginning of that period, Thus, ae a the can be worked by accumulating the placements backwards sé at most recent year until they total the number of units in ie some prior date. The average life is indicated by the years t curve the present (or other) date and the year the, Ce antes of accumulated backwards crosses the curve indicating the Pie ane: units in service (Fig. 9). It is seen that the average 2 es Rheteons as that secured by taking the horizontal distance betw Struction and retirement curves. 3 i d_ pro) For comparatively new properties, growing properties eeapily, erties in which the potential lives of the units are36 a “poyjaut zasouany ayy £4 ey e#eIOAT JO uoNLUyWAZap 105 poyo[d ‘so}ys04} OUIeIy pUe oYd OJ seAmo yuOUIEINEI pue JUoUIOONd Psye{nuMDoy—G “STL S4D24 CCE 260! 260! GAAP! BH BEY eee 226 GE! _26!___AG)_ OGL __ P06). Gl G6 DG} EL Paz T | See ESS [rma Rot Pe Sy a mo SN eee 5 a iy | oS Ree the —1=(0.051 0.999487 a— (0.00051326) (1.5999) 0.0008 The sums of the vertical columns between the stair-stepped Hen lines are the total renewals in any one year as indicated by the ese total renewals property-age notations at the top of the table. Thi ore. canoe of renewals of retirements at all ages from 0 to 17 sie except during the first maximum-life cycle. The sum of the horizonta line of figures to the right of the last figure (the one im- mediately above the heayy line) in any vertical column is the ate ments of the units placed in service that interval as spread out eres the following 17 years, actually 16.5 years since the R, curve en44 ‘0°0) StL OL | vee 88 0) c90'0) soez-o1 | gece i ister) 1:0) 980801 | eE-1E ie691 10028 “a}9z0"0 0 219070T | 1-08 jsoee: tlogor tora 1620) 8464-6 08-68 ZT ‘OF-0| 6026°S 6E-8E 1)9110°1 £70) 6202'S 80-2 Gzve 1}999% 2018 "8 26-96 0/2408 0] £606"0]6008: I] Lee e28h'6 9-2 O/0F2z 0/9962 Oo: sireror | sa-ve tse | Fe-8e Isl6It | ge-ee 21007ct | Bete seri | 1e-08 zect-or | 0c-6r SIEI'6 61-31 S189" SI-41 S818"9 21-9 eise'9 gr-St £629" Str $8966 ¥I-8T giszst | gI-cr ztoz9t | attr locee"o Soeeer | T1-0r it oe 8-2 a) oo om FSET“. re 6101-0 et a loseo'0 B-1 8000 °0]68000}6.200" \9ee0°0 i "0 |Ze10°0 10 1e20°oleser1|zo¢6" lczoe"F1leort “on letor’or g Bi “1/sr28"o|st0F*olsort ‘o) * 2919 oltsr9*clreze’s! '920F S1l2818 61 g9r9'sltozz gloter sloget glozeo zloroz tle1t9"0|Z0%2 "0le120 '0| quosied ‘aoqdnyynul pumas ss sla cle cle ale Ase ale oole cla olka cle ale lz Glo 0} suooma Phavitess 89 49 86919 «99 | (F9 9 to Ol9 ge wg ale le sig le gle’ lee] “(savour | “quasar te of 6F BF ir oir TE eb ge oe 6OF 66e )6Oge odie giggle $8) —oariaa) ae ve ge ze te ole se 4c oe sie Fe ge ge te oe oF BIE zt} semouos | Sysadord ato git os et oct =o Sot at bl So Blur Sloentlea tO} OL Su AAvaR posossers wuodvIp ys4y aAoqu nuMJoo TworIOA ut searouaz 0} spuodsesso9 (ZT 03 G) BUNT Ne}UOELLO 983K opvur adv syuowisaned PUL spumaLiod YOIYA BuLMp (919 'g-g ‘ZL 1-0) WasoIUL-osv SradoNy (syjun yeuysyz0 Jo quaoz0d ur passosdxa speaousy) (sar Govuaay suvaX O]) *Y 4AuaD GaX], HO NOIMVINOTVD TVAGNIY—TT atavy,jmao7d 0000"00T 1109 amy 86%" OF Mar amo 944) 20} (so}ouonboxy) squouroanos yonjow ayy 9zv oul ITOZTION SIyD uy BouN : “O]1S0z 00081 0) “0}¥218 “0/0800 FO}SS¥¥"0) oreo46 at 16.5 years. No unit, however, is considered to last longer than 16.5 years. Original units are assumed to be placed in service all at one time at the beginning of the 0-1 age-interval; thus they are all retired by age 16.5. It will help in reading Table 11 if the figures are thought of as re- newals when taken vertically in order and as retirements when taken horizontally. Actually, they are both because the caleulation is based upon maintaining exactly the same number of units (100 7 le # wb oy Renewals of renewals Rerewals of original units | 5 5 ercert Total renewals, p Vw A & FV oO 2 | Oat HL UL C24 C80 Bie 1B 2 dé 24 26 28 OR Age-iaterval, years ig. 11—Retirements and replacements for type curve Ks (10 years average life) as calculated in Table 11. 5 Qaeit percent) in service at all times ; immediately with renewals. _ Figure 11 is a graphical representation of the renewals calculated in Table 11 for type curve R, for cach year up to age 32 years. shows how the total renewals vary from year to year. Table it shows them constant to two decim: Th vO. al places at age 85. e process of determining the renewal multipliers from actual frequencies is Suggested where the equation of the survivor or fre- pene curve is available, or in any case, where the frequencies are termined within close limits. In‘the other process, the average 2 eee that is, retirements are replacedAT the frequencies for the two adjacent years is used as the multiplier. This assumes a straight-line relationship over the interval and results in rates (multipliers) which are higher than the true values for all intervals where the frequency curve is concave upward and in rates lower than the true values where the frequency curve is concave down- ward, principally in the region of the mode. Tf the equation of the curve is known, the true rate for each year can be determined by solving for the beginning, middle, and end of each interval and ap- plying Simpson’s quadrature formula to approximate the true aver- age ordinate. The frequencies used herein were obtained by solving the equation for 10 small intervals over the year, then adding them for the half-intervals desired. This accurate ‘method is also possible where the frequencies can be sealed from the eurve within the limits of exactness desired, For certain theoretical studies it is desirable to make this refinement, but for ordinary purposes it js not necessary since the difference is not likely to exceed 1 percent. COMPARISON OF THE METHODS OF DETERMINING PROBABLE AVERAGE LIFE P. robable average life is not an unchangeable quantity as applied to existing types of units; it is continually being affected by manu- facturing methods, quantity and quality of service rendered, man- agement policy, economic trends, natural weathering elements, wear and tear. Only in long-established properties with unchanging character of units and service is the average life not likely to change from year to year. For practical purposes, comptrollers and cost jife which is most likely to accountants seek a probable average i portray the conditions of the immediate future. They realize that the probable average lives to be chosen must be adjusted from time to time in accordance with the actual trend of experience of the property and the development of advanced practices. For these rea- sons, probable-average-lite determinations should take into consid- eration the present and probable future conditions of the property if possible, but any determination other than a mere assumption must be based, to a large extent, upon past experience. , Generally speaking, the probable average life of the units yet in service is the important quantity, for it is this property that is yet to be depreciated; that whieh has already ‘been retired has a known service life. General Characteristics The five survivor-curve methods and the turnover method are all equal insofar as mathematical accuracy js concerned. Their i e results as wverned by differences are found in the meanings of th the data utilized. The probable average life or average life deter-48 mined in each case represents, perhaps, the expences oe units or that of the same units over a different period o 3 ee oe 7 available information frequently determines the method neu ae used since sufficient data may be available for just the one Se Of the individual-unit method there ean he no question a ed terpretation of the results for it applies solely to the bempe rine and represents the distribution of retirement of these te ee units only for the year or years covered by the original in ae fi In no way is the average life affected by the units yet in ee mt ae rate of growth of the property, or the improvement in aus theprabe replacements as compared to that of the retirements, Datethe “all able average life of the future retirements would be ates stties these items. The method has the advantage in that it sn) Fee a to any retirements provided their ages at retirement are known. : f existing service is not a good measure of the probable average life of existing units. 2 eedicting The original-group method is an accurate method of Dee ae the probable average life of a given original group of units, fi “ the same age and design. It cannot be applied, however, ea Toe tirements from the group are sufficient to extend the pee of to a point which will permit its completion with a fair aces s6nF certainty. Therefore, for the first few years the probable past a life of the original group must be assumed from the experie! salen other similar groups. Objections to this method are that oe to only a single group (probably small) and that the orohane aise age life can be determined only after sufficient units have Se ine tired to indicate the probable path of the survivor curve. For a6 matter no method is applicable unless retirements have been ee For large properties, it would be necessary to compute many A es to cover all the yarious original groups in service. The method oA value in determining the relative merit of certain groups of bees especially those of different design, service conditions, treatment, ie time of installation, It is cony niently used to show a change ia probable average life for the units installed from year to year. haves original-group method is well suited to old groups of large numbers, Particularly of types or designs discontinued, . the What has been said of the original-group method applies to val composite original-group method sinee the latter method is scant except for the number of groups utilized. This method is Dare larly useful when dealing with fairly old groups of limited numbe! of units and spasmodie retirements, eon, The multiple original-group method overcomes certain objection to the original-group method. Tt indicates the experience of the oe eral groups of units as a whole from the date of the oldest origin’ group of units in service to the date of observation. The method ace not indicate the current average life being experienced since the49 actual ages at which the units were retired is not considered, the method being concerned only with the number of units remaining in each group. This is not a serious objection, however, if all groups are large in number, In the case of properties of considerable age and well maintained from year to year, the multiple original-group method results in reliable estimates of average life. In cases of newer properties the survivor curve may not be closed and will need to be extended for the purpose of determining the probable average life. Since each original group provides one point on the curve, the method is not desirable for less than, say, 10 groups. Because of the varying rates of retirement usually experienced by the groups, es- pecially if small, this method sometimes results in survivor curves of very irregular points; it may occur that points representing sur- Gig 6) older ages will be higher than those at younger ages ig. 6). A survivor curve ealeulated by the annual-rate method, wherein both the retirements and units in service are considered, reflects the rate of retirement of the units accurately for the observation period for which the curve is drawn, whether it be for the immediate past year or the immediate past several years. By caleulating a series of such curves for a succession of years, or & suecession of bands of years, the trend in probable average life can be shown. Thus, if the property is changing in character of the units installed, service ren- dered, or maintenance policy, the effects of these changes can be shown by the series of survivor curves. Sinee, as a general rule, the average life of industrial property units has been inereasing over the past several decades, annual-rate curves will practically always show a longer average life than will individual-unit curves for the same property. This is illustrated in Figs. 4 7, and 8. For the same rea- son, annual-rate curves for the period 1921 to 1930 are apt to indicate a longer average life than will an annual-rate curve for the same property for 1911 to 1920, Since 1929, yeplacements have been much smaller than ordinary because economic conditions have foreed com- panies to continue in service units that in normal economic periods would have been retired. Likewise, few units have been removed for inadequacy since outputs have had a tendency to decrease since 1929. A return to improved economic conditions will hasten retire- ments and no doubt show, for a given property, an average life Jess than that experienced during the depression years. While the annual-rate method is to be preferred, the files or prop- erty records frequently do not contain the ages of the units removed during each year and the ages and numbers of all units in seryice at the beginning of the period. At the expense of considerable office labor and study, these records ean be constructed in many eae where they are not now readily available. Once they are aval ae they can be continued with but little expense. A system of property50 Tanue 12.—Averace Lire or THe Unrrs Rerimep (Tasve 11, Tyre Curve R) Caxcubaren ror Dirrerenr Sincue Years sy tam Inprvipvat-Uxrr MetHop Average age of Units retired during property-group age-intervals oft unite tired dur _ : : + ing property-group lk = te pemetreel 5 | sto | ws | 9-90| 94-25 | a0-40[ 44-45 [Normal ® ® | @ | @ | ao | a ve i008 0.0070} 0,003 .! K 0. ee) ae é 0040} 0.0262! 0:02 2 | 0. 2.00 0.0054) 0.0459) 0.0: (0589) 0.0620) 0.0611 3.00 10.0049) 0.0645) 0.194 1184] 0.1198} 0.1201 4.00 10.0030) 0:0787| 0. 2080] 0.2005} 0.2052 4.50 5745) * | 5.00 0.0818} 0.4282) 0,: . 3 f 3313] 0, 3032| 0.3156 6.00 0.0719) 0.4664) 0.. 5 a 402 pASLL| 0,4287 7.00 0,0546| 0.4871] 0.8583) 0. 810.6680, 0.4095 8.00 0.0851) 0.4645) 0. . 9083, 0.8524 9.00 0.0171) 0.4456, y -33 970)1. 1695) 1.1831) 9.50 13.0835|* 10,00 5} 1.5082) 1.4319 11.00 0:3468 1.6505) 1.5408 he 7.4791] 1.3784 13,00 110121) 0.9635 hoy 05413 0.5878 14.50 : 2020] 0.277010.2740) 0.2514) 0.2648 -3887|0:035 0.0472)0.0583) 0.0464} 0.0517 10.4592| 10.3475) 19,4945 10,4985 9.6009) 10 2644 ‘Average life |4,4839] 9.9004) 10,9577 9.4620 10.5500) 9. 5040] 10,2216 0.8647 10.1877 i *Original units retired. Ba 33 eS Total units —_[2.5091)13.5063) 7.0203 a 10.0008 Tantx 13.—Pencryr Scrvivixa For Grovrs or Unrrs (Tanun 11, Tren Conve Ra) Cancutatep By THE OriaInat-Grovp MetHop Prop- [Sriginal-) Survivors of units |) Prop- |Original ivory of units || For comparign, erty | group | replaced during’ || ‘ecty | eiap | ‘replaced during, || tyre curve fe age, property age 4—-5* age, age, | property 19-20 years |__| years | yours |>———— Number| Percent | Hater | erent a @ ® | @ ©), ©) Mm | ® 4 oO 2.5931 | 100.0000 19 0 10,4592 | 100.0000 8 | 9% | 2.5018 | sp-o499 || 20 044 | 10/4538 | 99.9484 $ 3% | 2, tss2 21 14% | 1014274 | 99.6960 a) 3g i8e B| 2 He8| wae 9 | 434 | 2.4549 24 | 434 | 10:0233 | 95.8324 10 5 2.4031 25 5 9.6932 92.6763 Hh | 9i6 | 2-206 26 Be 912085 | 8811855 | a8 tge 2 | ih] faa) ie 14 | 9% | 1.5996 29 9%4 | 614523 | 61-6902 15 10! 1.2283 | 47,3680 30 “ 10! 7 16 | 1144 | O-ezes | si-osi7 || 31 ins | S932 | grote ie | i338 | Crane | 1S:2790 |” 82 BW ‘1/9015 | 18.1802 19 | 1434 | o.osa1 | 3.te0r || 3a | dase | S:oeae | | 3:3888 20 OL 0.5163, = 16: 0.0541 5178 16: 0.0000 | 07000051 records and continuous inventory, combined with a practice of dat- ing the units as they are installed, insures adequate data by which accurately to determine probable average lives and probable future retirements. While the annual-rate method reflects the actual rate of retire- ment for the observation period, it is not applicable to the past few years unless the particular type of units have continued to be in- stalled each year, A gap in the data at the young ages makes the starting point undeterminable. In such cases resort must be had to an assumption of the percent surviving at the age for which the first annual rate is known, or to the pocedure suggested on page 97. _As in the multiple original-group method, one point on the sur- vivor curve will be secured for each original group in the data for the period of the observation. Expressed differently, there will be one point on the curve for each year of age from the oldest group to the youngest. For this reason it takes past records for a long con- tinuous period up to the present before sufficient data are available. The turnover method is suitable only to long-established prop- erties where growth has been light and where the type of unit has not changed materially. Where retirements and placements are known, but not ages, it is the only possible method. It is well suited to property having a short average life or rapid turnover. A serious objection to the method is that the type of distribution of retirement is not determined, therefore making it impossible to calculate a probable-life curve. This latter curve is very essential in forecasting probable service lives of individual units in service. Comparison of Specific Results A comparison of the six methods can be made by constructing sev- eral survivor curves from the retirements in Table 11. This study will also indicate the accuracy of each method, for in this table the units as a group experience an average life of exactly 10 years, the individual units varying in service life from less than 1 year to not greater than 16.5 years, Hach of five methods (the composite origi- nal-group method not being used because the result would be identi- eal with that of the original-group method) will be applied to the renewals and retirements in this table for certain years between property-age zero and the age when the annual renewals become normal—that is, heeame the same year after year, in this case 10 percent, or 10 units at an average life of 10 years. In Tables 12 to 16 are given the results of caleulations of average life by the five methods as taken from the retirements and renewals in Table 11 for type curve I, (10 years average life). The average lives (actually average ages at retirement) given in Table 12 are Cs culated by the individual-unit method for the retirements of selecte single years. In Fig. 26 are given continuous curves of the average52 age at retirement for the Z,, S,, and Rs types. In the early years (bottom of columns 2 and 3, Table 12, and ages 0 to 10, Fig. 26) of the original property, the average life of the retirements 1s less than 10 years, the actual average life of the units in the property. The av- erage life approaches 10 years as the property becomes older, but fluctuates below and above this level. At normal age the average life of the retirements is exactly 10 years (column 11, Table 12), which is about the age at which the renewals become constant to two dee mal places. The age at which this oceurs is dependent upon the dis- tribution of retirements as later shown. These calculations prove that the individual-unit method of deter- mining the average life of units in a continuous property is not cor reet until the property reaches an age wherein the annual replace- Tantr 14.—Percent Survivin ror Groups or Units (Tanue 11, Tyee Conve Rs) Cancuzarep By THE Mutrieie Onrarat-Grour Mrrnop Property Renewals Survivors from original groups For comparison, eee eater type curve 5 luring property |-————— ee | x eet sec sate esl Ane, Units Percent | Percent survivl units yenrs surviving surviving | at col. @) sees o @) @ @ © © At property age 5 years a og 2.591 99.9499 90.9487 a3 14 15050 99.7001 9.0889 £3 24 o 99.0876 99. ii a4 0 97.8786 97-8837 a 4 0. 95.7704 95. At property age 10 years a au 4 | 8 gos | gig ae 14 10. 99.6067 99.6060 ee 24 7 99.0844 99,0847 56 33 97.8834 97.8887 te 4% 95.8316 95. aa 92.6757. 3-4 8 as 92.6729 92.078 a) z 0: 81.0592 oi 8 0: 7.3138 Aaya 4 0. 61.68 Property age 20 is19 0 10.45 99.9487 17-18 Lg 9. 99 9938 16-17 a6 i 99.0847 8 6. 07 ee 44 6. 96.8317 4:caes e 5 ot 2.6757 968s Ae 87010 Ss. 1801 o1H6 13.7873 7 . 1 ES :os02 16.207 4 11.3000 81.9595 ae 15.0308 4 i779 35.3127 73.9138 re 9 9.8318 61.6803 61.61 TO. 3888 an 6.4264 47.3703 47,9704 "toa ne 3.3196 31,9635 91,9628 5.8718 zi 1a040 18.1794 18.1 3.8330 Bet 9.4590 S156 8.544 44 0.1213 3.1641 3. 1648 sor w 0.5167 B 1 00000 sie &, 53 ments are approximately constant, assuming that the property is maintained without changes in the number of units in service, or in the potential average life of the replacements. At any time prior to the normal age, the determined average life may be either greater than or less than the true average life, depending upon the age se- lected and its relation to the distribution of retirements. The ealeulations by the original-group, multiple original-group, and annual-rate methods are given in Tables 13, 14, and 15, respec- tively. The pereent surviving at the several ages and for the observa- tion periods chosen is compared in each table with the actual percent Tante 15.—Prrcent Survivine ror Groves-or Unrts (Tasin 11, Tyre Curve R:) Caucunarep ry THe ANNUAL-RatTe Meriop FoR Suxaie-YEaR OnseRvaTion Partop Age-interval No. of Percent For comparison, jptmnite units, i type curve Rs in service, service retired _——_—_—— yeurs atbeginning| during ‘Age, Percent of interval | inte1 years surviving @ @) @ © | © ® @ Retirements, ageinterval 4-5 i i 2.5931 0.0013 0.0501 100.0000 | 0 100.0000 Ong 1 1.5999 0.0040 0.2500 99.9499 ong. 99.9487 Lig 234 0.8742 0.0054. 0.6177 99.7000 1g 99.6959 eae | gay | game | sae | eee | ae | dee i) 7 0.008 2.0877 s a dA 54 95.8323 4g 95.8317 Retirements, age-interval 9-10 0 - 044 13.5663 0.0070 0.0516 100.0000 oO 100.0000 Og 19g 0.0262 0.2524 90.9484 Org. 99,9487 14- 2: 0.0459 0.6136 99.6961 1 99.6959 rem 0.0645, 1.2118 99,0844 Py 99,0847 Big- 434 0.0787 20973 97.8837 334 97.8837 4 514 0:0818 8.2919 95.8308 46 95.8317 bis 8 0.0719 4.8466 92.0701 54 92.6757 Sig 136 0.0546 7.0616 88.1845 os Ug 818 0.0351 105627 B1.9573 7 S1l9592 ea loi | 15.8774 73.3004 5 73.5123 914-10: 61,6622 93 61.6800 Retirements, age-interval 19-20 Or og 10,4302 0.0516 100.0000 0 100.0000 OM 1. 9.1271 0.2531 99.9454 04 90.0487 ie 2 $6582 0.6137 99.6054 14 99.6059 32 2 1.2117 99,0836 234 990847 tk 2/0900 97.8830 3g 97.8837 # 3.2985 95.8314 ag 95,8317 : 4.8459 92.6752 5 92.6757 oye 7.0504 88.1843 6 88.1846 is 10,5499 81.9590 7 ere He: 15.8546 73.3124 8 73.31; 94-1034 23.2109 61.6800 984 61.6800 10}¢-11: 2 32.5257 47.3704 10% 47.3704 eae 2.3982 43,1240 31.9628 1146 31.9628 aig-13 0.9768 58,0002 18.1702 1B 18-1780 13}g-14 0.3275 62.9618 8.5442 13) shee a1) 0.0821 88.6784 3.1686 14 + 15}4-16, 0000 0.5165 15 0.5167 16)5-17, 0:8008 io 00000 16: 0.0000‘Sere ‘foo ‘SOTs "6 OS-6F B19" 902 elves" 01 8294° 008 SoS SOL Fro ‘SI88'6 6-8 £0eP" 961 Tl86°Th LOTT 96S VERE soze"res | 1026°6 | Soy geercst | 1etett | seer-exe 80-02 sure'yee | Iss0-or | Zor qsre'ex1 | 2to0-cr | tere tc 8-16 L191 $1 2661 OT oer ‘pels Lot S6L'IL ‘PELs LOT 12-08 $796" S0T ‘9F9Z “OT or THEL"6VT Z6Sh" OL TREL' OFS Oc-61 6269' S6P PES "OL PEED GPLE OE STEL'6 GPLT 68S oI coh ssh POSL'OL S-cr Tere Ost S189" L TEFL ORS SI-ut 1862825 6hL6'6 cei G19b'ZZT 22129 O19F' ee 2t-91 zoze'sor | 1e22"6 | 1-08 Serr'OIt | cite'9 | esFI“OTE 91-1 | TSF Sor 0409°6 OF-6E 1208 °60T 8629" 1208" 603. str TIP6 8h 6crs 6 6E-88 SLL COL $896'6 SLL1°C06 ‘¥I-er zoso'6 «| Se-2e o6oz'z6 =| gaszer | o60c"c6T sI-at | F898 °6 28-98 LICE SL 2106" 9T LTGP SLT SI-Il | rig or | @SLT-O1 98-38 0086" 29 ‘g986 ST 0068 °Z9T Thor S86F'OL | ‘SR6P OL 8-8 E88o "OF ‘e99e" SL TESS" OFT ol-8 8 DT SZLL"OL t8-88 BOIL Ze 988E "OT 6912 cer 63 t S082 "OT t8-0E ETSE "Ss Ogos" L e1se sal 8-2 us 909 "OT GE-TE ‘qearer E828" FL Blle's S828 "FIT 49 2190°0t | 18-08 | ap | sorF-6 sees's | seer eor 9-9 sers'zce | oscrs | og-6c | oN | oczo'g reese | ozeo"eor or SHEL CHE 60L6°S 62-85 $620 '& 2009°T 8620°S0T ee eecz'eee | Gc0L's | 86-26 T6GP'T sois'0 | Tech" 10r 8-3 OTgo' Sze Lere's: 23-98 eeeo"o ‘PS0r'O e209 00 a-t 8800 ed 2906' 918 SLer'6 9S 69F1'O. 69FT"O 69PTOOL 10 a @ @ @ @ @ ® i) sm smn saves symm “qwazaqut eras saved yun ‘earour sivos “ant swaimuy | qwasopuy | yo puood sqaaronur| “om | ‘quaioyur | qeasaymy | yo puooy | sym | masonur esvieae | jopuoo) | ‘saump | aqumouor wo (| omeioae | jo puoor | ‘sump | siymoues | “quasonuy | 988 ‘pour | sjuawasmes | paimoa | pogvjumoon Ayredoad | pau: | sjuouomer | payor | poywjnumoow tmp. | Aodoad Sova fparmmmumooy) ia syd Aysodoud wuimag | Soa [pessramnooy] Sun [site Suiedosa] susousy | TeuHHO Twat, Tea, (gy HANNO BAX], ‘TT PIV], KOU) CONLAY YAAONUD], AHL AM CALVINOIVO SLNGNEUILEY 10 Gav] AOVHTAY—9T GIA],55 surviving at corresponding ages for the original R, type curve. In every case agreement is found. In these comparisons, it is not neces- sary to calculate the average lives, nor to extend the survivor eurves for calculation of the areas since, for respective ages, the pereent surviving as calculated in Tables 13, 14, and 15 agrees with that for type curve R, for an average life of 10 years. The conclusion reached as a result of this agrcement is that the original-group, multiple origi- nal-group, and annual-rate methods of caleulating survivor eurves and average lives are correct and do give the true average life being experienced at the time of observation by the group of units observed, penile of the age of the property and the observation period chosen. | 4 4 § é | | laced it? service a retired \ ry [— Accumulated fA? urtits placed i? vervice Dag years et ae Accurmiated ry writs retired 4 - Joral cunts phe o Ov SS 2 8 0 ule 16.00 a 4 fe BDH Property age, years Fig. 12—Accumulated installations and retirements of type curve Rs (10 years average life), as calculated in Table 11, plotted for determination of average life by ie turnover ‘method. The accumulated installations and retirements for type curve Ry (10 years average life) are given in Table 16 and plotted in Fig. 12 by the turnover method. This property starts with an installation of 100 units at zero age, so that an average life by the turnover method can- not be determined until 100 units have been retired. This oceurs (Table 16) between ages 13 and 14. At age 14 the accumulated retire- ments (102.1778) equal the accumulated installations to age 34, s tablishing 10.6 years as the average life (turnover period) sere when the property was 14 years old. This average life seareae Sos umn 6) as the property gets older, reaching a minimum of ae by at about age 16 years. A maximum of 10.62 is reached at about age56 24. From Table 16 it can be scen that the average life determined by the turnover method fluctuates below and above the true AEE life until the property closely approaches the normal age. The Be clusion is that the turnover method applied to a property maintained at a constant number of units in service of the same average life results in an average life which may be either greater than, le He or equal to the true average life, depending upon the ae 9: ne property with respect to normal age and its renewal ¢ ave i isties. A discussion of the age at which a normal condition is reached is given for properties on page 61 and for the 18 type curves on age 80, ; Many. industrial properties have steadily grown in the numba units in service; this has made it necessary to deal with a a representing retirements from among greater numbers of unit Ss 5 service year after year. A renewal calculation similar to that eyes id Table 11, but with an increasing number of units in service, woul offer for the methods of determining average life a COT ae typical of examples encountered in industrial practic neDe a gives the yearly total of renewals plus installations for such a cal a lation for the same distribution of retirement (type curve R,) av average life (10 years) as used in Table 11, but with an annual FS of 10 percent in the number of units in service, making a total of i units in service at the end of 20 years, as compared to the constam number of 100 as used in Tables 11 and 16. : the The five methods can be applied to the renewal caleulation for t growing property in exactly the same manner as in the preparation of Tables 12 to 16. The results are given in Table 17 for the bs over method and for the individual-mmit method. Tables for ee original-group, multiple original-group, and annual-rate metho are not given because, as before, the original R, survivor curve cal always be obtained by either of the methods for any age since the aa frequency distribution of retirements and renewal multipliers are used, the only difference being that the multipliers are applied to a greate? number of units. ' a From Table 17 it is again seen that the individual-unit metho (column 7) and the turnover method (column 6) indicate average lives which change continually until the total annnal renewals be- come constant. In this case, however, since additions are ey made yearly, the retirements hever reach the normal average life of 10 years, As before, the determined average life fluctuates below and above the true value of 10 years, but is generally below. A third renewal e: aleulation of type eurve R, (10 years average life) was made to show the trends of average life and renewals for 4 property which rapidly inereases in number of units in service, then decreases. The placements are shown in Table 18. _In this calculation (Table 18), the average life determined by either the individual-unit method (column 7) or turnover meth57 (column 6) remains less than 10 years until after the reduction in number of units in serviee is started, The actual values are con- siderably less than 10 years in the early ages. If the number of units is allowed to decrease until none remain, the average life by these two methods will continue to increase to a maximum of 16.5 years— the maximum life given by the R, type curve. Tasrn 17.—Turnover Periop aNp Average Aas or Rettrements ror Tyre Curve R: Renewas Wuen tHe Unrrs in Service Are INCREASED 10 Percenr Hac Year (100 units in service at age sero) Original | Placements | Original proper-| Retirements | Accumulated Average age property luring | ty plus acou- | during retirements | Turnover | of unite. ABC interval, | mulated place- | interval, toend of | period,* |retired during interval, | units” | ments to end of | units interval, years | interval, years interval, units units ‘years a) @ ® o @ @ @ 1 | 10.1520 110. 1520 0.1520 0.1520 0.49 1-2 | 11/4364 1215884 014304 0, 5884 1.45 2-3 12.9722 134. 5606 0.9722 1.5608 2.41 a4 14.8256 149. 3862 1.8256 Not 3.35 5 | 18/0962 167.4324 8.0462 4.28 5 6 20.6495, 188.0819 4.6495 determin- 5.18. 7. 24.7230, 212.8049 6.7231 able 6.07 ci] Boe) Hee | tee ee x 278. 032: 3 : +10 42.3087 320.3409 18,3087 8.65 10-11 48.6519 368, 9928. 22.6519 9.39 1-12 | 54.2849 423.2277 25.2849 9.96 Be | See | mie | Bas ee 1-15 61.7376 601.0364 | 23.7376 9.58 1-16 | 66.8007 667.8371 24.8007 9.05 16-17 73.2812 TAL. 1183 27.2812 8.75 17-18 82-4886 823.6069 BL. 8.82 13-19 92.1915 915.7984 36-1915 8.98 19-20 | 103.2143 | 1,019,0127 41.2143 9.05 20-21 | 114. 46.3015 9.06 9.47 bigs | 1268000 51,5609 9.71 9.26 S23s | 18.614, | 1205. bree 85.6141 ee gn 51,6004 | 1,550,1796 “6004 5 . 24-25 | 165.7576 1.715.9372 60.7576 628.9373 9.65 9,30 25-26 | 181.4605 72.4605 696.3978 9.00 9.25 26-27 100.0848 79. 0848 775, 4820 9.58 ees 27-28 | 218.8619 86.8649, 862.3475 9.57 oir 28-29 | 240.8724 95,8724 958, 2199 9.57 a4 29-30 | 266.0525 108.0525 | 1,064.2724 9158 o.17 30-31 | 293.2816 117.2816 | 1,181.5540 9.60 9.18 31-32 | 32214081 42974631 | 1,311.0221 9.61 9-20 82-33 | 255.6089 1426080 | 1,453.6310 9.62 a 33-34 | 390.7845 156.7845 | 1,610,415 9.62 9.32 34-35 | 429:1730 17211738 | 1,782.5804 9:61 9: bd 189.0126 | 1,971,6020 9.61 9.22 Siar | Sis'g006 207:5696 | 2,179.1716 9.61 gat Soup | geriagre gastos | Fescasis | oe | 8:20 9 e 1658. 5 6010098 276.0428 | 2,934.1744 9.61 9.20 ‘*Measured backwards from end of interval. findividual-unit method.58 Tape 18—Averace Lore Cancunarep ny THe Turnover AND Inprvipvat-Ustr Mernops ror Tyre Curve R; Waen tHe Numper or Unrrs In Servicr Is Increase, Txen Decrnasept Original Accumulated | =| Accumulated Avene property placements Units | retirements Turn- Me nea | to ex of retired | to end of pation eis interval, interval, luring =| interval, od ES years: units interval units yeare terval, years @ | @) ® ® | © u) o1 15.0077 0.0077 | 0.0077 O30 1-2 30.0533 0.0456 0.0553 1.63 23 45,1908 011375, 0.1908 a a4 60, 5092 N 0, 5092 Ris +5 76.1371 1.1371 " 58 92.2427 2.2427 84 ane 67 109.0309 4.0309 6.72 549 8s 126.7706 6.7706 7.50 é 8 & 9 145.8395 10.8395 8.30 707 2-10 166.7078 16.7078 8.90 ae 10-11 194.8194 8.1116 24.8194 9.35 oe M12 2254084 10.5840 35,4034 9.64 oe TH3 258.3140. 12.9106 48,3140 9.79 9:30 13-14 84.7519 293.0659 14.7519 63,0659 9.83 042 14-15 | 36.1361 329.2020 16.1361 79.2020 9.85 . 15416 | 87.3333 5353 2 9.75 0.48 16-17 | 38.4700 fosco008 1s 4700 138: 602 9.67 B38 17-18 39.8313 444.8375, 134.8375 9.57 a 18-19 41.5363 486.3738 156 3738, 9,50 9.20 19-20) 43.6004 520.9832. 179.9832 9.52 se 20-21) 51.0118 580.9950 28.0118 205.9950 9.64 age 21-22 | 53/6161 634.6111 28 olor 234.6111 9.75 se 22-23 | 56.2175 690. 8286 31.2175 265. 8286 9.83 eae 23-24) 58/6200 749.4495, 83.6200 299.4495 9.88 oe 4-25, 60.7759 310.2254 85.7759 835.2254 9,88 ‘ 25-26 | 62.7612 872.9866 "2 9.79 ae Be-27 | 84.6556 Sur-eias | 30 Oeee bibaread 9:78 ips ae Bocas 201 41-6279 454.2701 2 ue 0.54 5 i 43.8106 498.0807 : 4 20-80 | 71/2838 3645 do.2a3e Stee $f 9.53 30-31 | 24.0235 3881 593. 3881 9.77 9.8 S182 | 26! 8530 3400 645.2420 9.83 sy 32-33, 29,5120 7540 699.7540, 9.87 be hee 31.6980 4529 756.4520 9.90 3:83 33.2201 289. 6820 814.6820 O.98) p 35-36 10,08 873.7125 9.98 ee 982 7306 10,04 ne ae 1,040:9320 | toca | 10:88 n, 1,099.4679 10.65 10.69 aan 1, 147.1980 10.89 ai 1718915562 10.28 e 42-43 : 10,47 ii hee | ge | Be 1262117 75 2 1/296; 1320 9:78 9.98 *Meaaured backwards is Heard a re end of interval. a instante lable similar to Table 11 was calculated by starting with zero units at zero at tesla, a ae gach your for the first 10 yenrs, 20 each year for the second 10 yesr® 38 ae re if yoare; then retiring 25 units each year for the next 6 years, 20 each year f0F t alton Co the Fonewrte a efor he next years. ‘Thene inataliaions and retinemnts are J” faa, ts made to maintain the property at a constant number of59 The original-group, multiple original-group, and annual-rate methods are not applied since, as before stated, the same R, survivor curve will result when the same frequencies and multipliers are used. _ The actual numerical magnitudes of the average lives determined in the two preceding renewal calculations are not of much impor- tance except in showing that they depart from the true value of 10 years. Even with a controlled constant average life of 10 years, the average life determined by the individual-unit method or the turnover method will be greatly influenced by (1) the distribution of retirement (type curve), (2) the percentage rate of increase or decrease in units in service, and (3) the age of the property when observed, Many variations are possible in a renewal calculation by assigning to the replacements different average lives and different distribu- tions of retirement. Preliminary trials indicated that the renewal calculations were easily possible and that the results could be checked by the various methods of determining average life. Suffi- cient ealeulations were not made to warrant presentation of the re- sults at this time. Whenever the average life of the replacements or distribution is changed, the ayerage life and the resulting sur- vivor curve will pass through a transition period until all units in service are of the same characteristics. III], CHARACTERISTICS OF SURVIVOR AND FREQUENCY CURVES Following the publication of Bulletin 103 the author continued the collection of data from which to caleulate survivor curves by the five methods presented herein, with particular reference to other than the individual-unit method, since only that method was employed in Bulletin 103. To the 65 property groups first presented, there are added 59 property groups from which 111 survivor eurves have been calculated, making a total of 176 survivor curves studied. _ The material has been. accumulated from many sources, xepresent- ing the following industries: gas, electric light and power, railway, telephone, telegraph, water supply, agricultural implement, motor vehicle, and street pavement. A description of the original property groups (page 150), a compilation of characteristics of the Tih estes (page 142), and the 176 eurves (page 155) are presented in the Ap- pendices, : Fs re The curves are numbered as means of identification. The firs' number is a serial number; the second indicates the place of ea curve in the series assigned to that particular class of Galera the final letter indicates that additional curves have been drawn ae the same data by other methods or for different, observation periods. _ The number 149-11-e for the electrical distribution transformers60 means that this curve is the one hundred forty-ninth in the series published in this bulletin (including the 65 originally published in Bulletin 103), that it is the eleventh eurve for distribution transform- ers, and that at least four other curves (a, b, c, and d) have been drawn from the data representing this particular property. _ The many sets of survivor and retirement data studied all result in the same general type of survivor and frequency curves. The fre- queney curves rise slowly, reach a maximum (the mode) in the re- gion of the mean, then fall off at a greater or lesser rate than they rose, exhibiting the characteristics of the usual distribution curves. Occasionally, however, one may start high, pos ing a high rate of retirement during the first year. The survivor curves, being stmma- tions of the frequency curves, start horizontally at zero age, then fall at an increasing rate until the modal age is reached, then fall at a decreasing rate until the maximum life is reached, at which point the curve is usually horizontal again although sometimes it inter- sects the base at an angle. CLASSIFICATION OF CURVES The tendency of the eurves to the same pat- tern suggests the poss! bility of grouping them into types. Since the lo- cation of a particular survivor on a graph is affected by both its span in years and the shape of the curve, it 1s difficult to classify @ group of curves unless one of these variables can be controlled. This is easily done by ex pressing the age in per- Pass cent of average life. \ Any survivor curve cal 2o}— corte L be generalized without OFF ac| C4 fF distorting it or chang- alee ing its characteristics. fs Figure 13 shows the ! curve from Fig. 10 so S38 3 ee treated. Age, percert or average ry 7 All 176 frequency and survivor curyes were age J8- Generalized survivor curv generalized to cause 1s expressed aa'a percuntage of weer Tan the61 the age to read in percent of average life and plotted for comparison and study. A discussion of the ouping of these curves into 18 types is given on page 64. Table 27, page 142, is a summary of the more important characteristics of these property groups and eurves. Columns (9), (10), and (13) show that the mode may oceur either to the left, approximately coincident with (symmetrical eurves), or to the right of the average life. The maximum life, columns (12) and (15), is generally more than twice the average life for the left- modal distributions, about twice the average life for symmetrical distributions, and generally less than twice the average life for right- modal distributions. ® 4 = ws i? | | | | 8 = SS s normal annual renewals = s : 24 2 ad g Re ' é = 2 L | 5 ae pa ae eo Ze ‘Maximum fe, percent of average life , Fig. 14.—Number of maximumlite cycles reaulted, 10 reach normal annual Te- nesekd, U4-aNumber Of Maximum Ute (dats trom Ballets 495)" NORMAL CONDITION Figures 14 and 15 show that the life eyeles required for a property having an unchanging average life to reach a state of normal a renewals, or age of stability, is dependent upon the maximum i and upon the ratio of the maximum life to the modal Le aie general, high modes and modes to the right of the average | ee longer periods of renewal pefore the property reaches the a a condition. This phenomenon is important in the sete ee average lives, particularly by the individual-unit an one methods wherein the average life determined for property& ® * Lefr-moda! = Symmetrical ~ © Right-modal x s & A Nn ~ | Average-Iife cycles to reach normal annuol renewols © 9 5 Moxinum fe, year: Lecation of mode, yee! Fig, 15.—Number of average- newals, as related to the ratio o Bulletin 103). tice i annual re life eycles required to reach normal annual 1 f maximum life to location of mode (data from has reached the normal condition is quite likely to be incorrect, as shown by the discussion on pages 51 to 59. The foregoing discussions of the life eycles required for a property group to reach the normal renewal stage is presented on the basis of the annual renewals calculated to the nearest thousandth percent (8.078) and reeorded to the nearest hundredth (8.08). Should the calculations be carried to additional decimals, the number of cycles to reach constant renewals would inerease, and, conversely, caleula- tions to the nearest tenth of a percent would result in a shorter time to reach the normal state, Mathematically, there is not a definite age when any Property will become stabilized because this age depends upon the degree of last-place accuracy involved. However: the nearest tenth of a percent will serve, and, except for certain theoretical studies, it is unnecessary to be that exact. In practice. it is improbable that the replacements will follow the identical law of distribution of retirement and average age set forth by the orig! nal distribution curve from which is determined the normal age. GENERAL CAUSES OF RETIREMENT It has been shown that all survivor curves for industrial properties are of the same general form and exhibit certain common character- isties. It will presently be shown that these curves when generalized63 can be classified into a few types, the number being dependent upon the spacing of the types. Actually, there § an infinite number since the change from one type to another is a gradual transition. In order to see why these curves possess the same general character- isties an understanding of the causes of retirement should help in explaining certain shapes and behaviors. In a broad sense there are primarily only three reasons why a unit of physical property does not remain in service perpetually. First, it may wear out—become so physically decrepit that it can no longer perform the service for which it was intended. Second, functional forces may cause the unit to be retired beeause of inefficiency, inade- quacy, or general obsolescence. Third, an accident may destroy the unit or cause its removal. Whether the unit can resist the forces of retirement in the first reason is dependent wholly upon the quality of the unit itself; the second reason exists because of changes in the character of the service demanded, such changes being outside the limits for which the unit was originally intended; the third rea- son is one of chance and has no relation to the quality of the unit or to the character of the service demanded. The first and third reasons can be related to the causes of human deaths, but not the second, because human life is not ended by obsolescence. The simple physical units, such as small tools, poles, ties, and rails, are frequently retired because of impairment of their physical conditions as a result of ordinary wear in service and the weathering caused by the elements. Compound units, such as rolling stock, gencrators, buildings, and machine tools, are frequently retired be- eause of a combination of physical condition and serviee demands which render them obsolete, inefficient, or inadequate. Removal be- cause of accident results from storms, floods, earthquakes, fires, and construction of neighboring structures. ; P. In any group of units exposed to the same ordinary service, each unit is subject to the same accident risk, and probability of retire- ment from this cause is equal for all units. If the units were all actually of the same quality and exposed to exactly the same service and maintenance conditions, they would tend to wear out at the same time, thus producing a distinct symmetrieal grouping of the retire- ments about the average life. Physical units, however, are not of the same quality, are not given the same maintenance, and are not subjected to the same service loads; therefore, the distribution of re- tirements spreads from the mean, but would still be symmetrical if retirements were only for causes related to accidents and crea Wear and tear. Improvement in quality, growth of the system, an changes in policy and economie conditions tend to distort the retire- ments from the symmetrical. Es ‘i Tnherent ability to perform the intended service, roneene economie conditions, management policies, invention, growth o: ee Service, accidents, and maintenance conditions—all affect retirement.64 The final shape of the distribution curve represents the composite retirement from these many causes, and, under these conditions, the curve may take any path, starting always at a zero rate at zero age, then reaching a maximum, finally returning to zero at the maximum life experienced. The original points of many computations may not form smooth curves, but even in such eases the characteristies of the common distribution curve are exhibited. After all, the distribution curve formed by the retirement of a group of industrial units is a result of chanee to the extent that in- herent quality may vary, management policy change, invention in- tervene, and economie levels fluctuate during the life of the group in such a way that a second group would experience a quite different Service life. But it is these forces that combine to cause retirement, and, therefore, they must be considered, Expert judgment, neverthe- less, must always be exercised when forecasting the probable average life of any particular group property or the probable life of a single unit. IV. CLASSIFICATION OF CURVES INTO TYPES Since the survivor and distribution curves of different physical Properties show similar characteristics it should be possible to ar- tive at a few typical curves which represent, at least for practical Purposes, the general run of curves most likely to be encountered. A comparison of any number of curves ean be made if they are drawn to a common seale in the generalized form shown in Fig. 13, wherein the abscissa is expressed in percent of average life. All 176 survivor and frequency curves were plotted in this manner and com- pared. The frequency curves were plotted in age-intervals of 10 percent of average life corresponding to an average life of 10 years. FORMATION OF THE 18 TYPE CURVES The 13 type curves published in Bulletin 103, which were obtained by classifying the first 65 curves, are the forerunners of the present 18 types discussed in this report. These 18 types were formed from the 176 property curves by a classification of the 176 frequency eurves which have more distinguishing charaeteristies than do survivor curves, The first inspection of the generalized distribution (frequency) curves indicated three distinguishing characteristics : (1) the posi- tion of the modal age (the age of maximum ordinate) relative to the average life, (2) the modal frequency (height of mode), and (3) the maximum life relative to the average age. The first two of these are the more significant since the latter characteristic is primarily a result of the first two. The modal frequency is important in this comparison sinee the eurves were all plotted in 10-pereent intervals65 equivalent to 10 years average life. It is readily seen that the modal frequency is dependent upon the average life, as well as upon the shape of distribution when the curve is plotted in years since the frequencies must total 100 percent. If units of short average life are under consideration, the mode is higher than for a similar curve for units of longer life since the greater number of annual frequen- cies in the latter case must still total 100 percent. In this comparison of the generalized curves, however, all curves were reduced to the same equivalent average life, and the modal frequeney, as well as the modal age, indicated a significant characteristic of the curve. Fig- ure 16 is a comparison of three survivor curves plotted to show the likenesses when the age is reduced to percent of average life. Tt should be noted that two curves of different average life appear the same when converted to pereent of average life if their distribution of retiroment is the same, Also, the average life may be the same but the distribution quite different. Figure 17 shows the frequency curves for the same properties. : As stated in Bulletin 103, the 65 frequency curves were sorted into three groups according to whether the mode was to the left, ap- proximately coincident with, or to the right of the average-life ordi- nate. The curves in cach of these three groups were then sub-classi- fied in accordance with the height of the mode, taking also into ¢on- sideration the distance of the mode to the left or right of the average life. This classification, which was almost wholly by visual inspec- tion, resulted in 13 groups—four groups having the mode to the left of average life, five groups having the mode approximately at average life, and four groups having the mode to the right of average life, As would be expected, some curves could have been placed in either one of two classifications. The classification and “goodness of fit’? to type curve for each of the 176 curves studied are shown in Table 27, page 142. The frequeney curves in each of the 13 groups were averaged and the resulting frequeney and survivor curves drawn. It was found that these average curves were smooth and that they were spaced within each group fairly uniformly. This suggested a controlled spacing of the curves and a more exacting graduation, both of which were accomplished by drawing the curves to a large scale and working with them until they were spaced systematically and adjusted to an area of 10,000 percent-units which corresponds to an average life of 100 percent. These 13 frequency curves and the cor- responding 13 survivor curves were published in Bulletin 103 and are republished here in slightly altered form as a result of later mathe- matical eurve fitting. Bulletin 103 reads: ‘‘More than 13 type curves could have been developed from the original 65 property groups by spacing ae closer or by adding additional curves beyond the limits represent by the end curves in each of the three groups. ‘Thirteen types rather66 “OR Os vCAW Jo “oI, oS waoau mee BUY WALA SaUoe JO JueoIEd Uy payo|d S9AIMo JOAJAINS aUUYS ayy WIE SIBBK AO — LT “BI Uy peyold Saino AOAIAINS JO UosLEdMOg—gT “SIA quoased uy porgojd xo. Uy payold seams sous a4lt ebosare go tuazied aby ail 28pt2AD yo wi221ad ‘aby + BP VB? 00? CO OF) Ov! O71 OO OF OP OF C2 _O L2F OC? OF! OF! OFF Bi OF} OB. oO? Of G2 O = : io | io T 1 or ie a2 | = a ced - lar ’ q 7 lacs y (eat ey t 98 12. q s = $ 22 22) as eae fey oe | om T joe at EX L | H Oe s108k aby 8 s.i00k aby aw Yo 2 or 8 28 Meee ae wo ee 2 2 Mm ? or —— La lee I loz ® As, 221 72 oF ee 275 3 | 3 a adel 2%] 4 EP Ze / oe is Ce y #7 | 26 227 Z| 3 oe j aS aba ee 2a j oot au Ev| on ie | 26 Buber | eAr9 Be WE ea je t lee aart ty { | To TT ping oF Mnctividisal Curves 2 CMe EA AVS. #4 77 09 UW WO Wee 79 76 I67 168 It 163 + 78 136 69 B21! tu 75 68 G6 l., 69 70 Xl IT] 7% 67 | | & Th 3 #7 | 13D (ZB | a Th | Th 23 H | Ti ver | | 8 T & 2 Percent renewed during age-irtervatl & Cs | Lae ab HH } a ok 41h S EMETE 5 BO 7B 70D 125 (@O 17@ 200 ez 0 Percent of average sire 3 obtained by sorting curves 65 to ference to the origi- iS Fig. 18—Aver: are is, UcpAvernme Ieft-modal frequency, cieve groups ar distributi ting was W: ee istributions. Sorting was without ref ve as the original 65 properties er of logical groups. As these ches are made, later informa- ed closer for required not ineluded in this than any other number are presented he seemed to fall naturally into that numb types are used and as additional resear tion may indicate that the types need to be spac accuracy and extended to embrace examples study.’? i Valuable, then, would be an independent study with the 111 addi- tional curves given in this report, many of which were ealeulated by methods other than the individuaL-unit method used in Bulletin 103. Frequeney curves 66 to 176 (see Table 27) were each drawn to the percent of average life basis for 10-pereent jntervals and classi- fied in the manner deseribed for the comparison of the first 65 curves. The groupings were averaged in the same manner as before. The average or composite distribution curve for each group 1s shown in cation is concerned, Figs. 18, 19, and 20. So far as general shape and the new 111 curves resulted in average curves which closely followed the original 13 type curves, with the addition of examples outside thesom To T T T cH Th 7 Tone | ~ HoH + [ Seat ry To [ We P Individual Curves g H+ ; REE eae ee zs H 3 | 447 102 87 133 loa 29 % Ht } rt {{| 42 é 9 166 Il 16/ S20p i f 42° joa a9 iz jor 4h > f {Mt I 140 172 ‘ i! 138 1279 . | | eieecees: 4 at mu y | t t reo | 3 | lo ; ae a S ee { Te | L 1 é 1 e I | CG €5 50 75 100.725 750 FE LO Percent of average /ife Fig. 19.—Average symmetrical frequency curyes obtained by sorting curves 65 e to 176 into sroups of similar distributions. Sorting was without reference to tht original 13 type curves. limits covered by the 13 types. The F curve (Fig. 20) in the right- modal group is the only major departure from the first Oe based upon only 65 curves. Since this study checked the original 1 type curves as to form and approximate relative location, a secon’ grouping was attempted, this time by direet comparison of each of the 111 curves with the 13 { ypes. The average curves for each group ob- tained in this manner checked the 18 types as was to be expected. AS a final study all 176 distribution curves were compared with the a type curves, grouped, and finally averaged. In this final groupmg, however, certain curves were not used if the number of original units sult in a reliable eurve; neither were the esulting mainly the long stub check of the 18 type curves Sy and R,, all of which are extensions of the three original families of curves,30) | aoa t st iH ST of HTT S | A Grouping of individual Curves & 1 HN 4 BG BPE rene % T ee S149 16 15d |S) 134 BB BA lad g 2 83 135 132 142160 110 97 20) | + 130108 28 ‘107 10D PB > Hr 106 17/ s TH ttt 122 + | | [ 4 wetted t t & LH } - Sok oA SA | t ct i 5 tT © Tdetc Atay S + Us i ye a ITT ‘ O25 BO 8 TOD. MB NOD NOTE LO ee EOE FPercerit of average life curves obtained by sorting curves 65 to Pig. 20.— Average ri: 1 47 hie groupe of similar aistibations Guvting was without reference to the _ From this final grouping the 18 survivor, frequency, and probable- life curves shown in Figs. 21, 22, and 23 were arrived at by adjusting the spacing and area. The original 13 types were not altered (except later slight changes were made when fitting equations to them), the five new curves being fitted to the three original groups (left-modal, symmetrical, and right-modal) . Table 27, page 142, shows the final ¢ curves. The number of curves in each group is: Jassification of each of the 176 Pesca iS sccke S18 Spee it S259 IS, btei8 at ‘Se Total 65 52: : Percent surviving & 8 8 for 108 intervals N { 8 ele Frequency, percent 3 g 4 $ g Ue) 5 8 i Ne Nisha lite | | fea} ° [Average Vi "Siar les £5 z,| \|_| reqeercy | | curves Fe | @e Le A I~ athe | , od 260 300 320 340 360 360 0 0 40°60 80 Age, Jig. 21.—Final survivor, (00 180 140 160 180 200 220 240 2G0 COOKD Percent of average life probable-life, and frequency curves for the left-modal71 Surviver \- Probable -life curves curves 8 eee 8 Percent survivirz y__s sg Average life} srevervals 80 &. reent fer 10. BFR 8 8 Frequency, pel © oA Dt PO EO Sns SO Oe A IE IO 10 £00 Age, percent fiaverage Wife urves for the symmetrical Ny Fig, 22—Final survivor, probable-life, and frequency © types.Surviver Probable -life curves 3 curves y i surviving Bie Fercertr S Ss 20) lo Average life ert for 10% interval “8 F PR YR Prequericy, o A 9 ACCOR SOMO 12) ide ign On Age, percent of average life Fig. 23.) oon ‘inal survivor, probable-lite, and frequency curves for the right-modalEven this study of 176 survivor curves does not warrant the con- clusion that the 18 types cover the entire range to be found for indus- trial properties, but certainly they will cover those that may be eom- monly found. Only use of the types will prove whether they are spaced such that intermediate cases ean be assigned to one type curve or the other and used as such without too great an error. Since exam- ples of the end curves of the three families are less numerous than the others, many more curves should be collected and classified to estab- lish the relative frequency of occurrence of each of the 18 types. A total of 9 types—L,, Ls, La, Si; Se, Sy» Sy Ry, and R,—embrace 132, or 15 pereent, of the 176 curves. CURVES OF UNUSUAL SHAPE With due consideration given to the forces which control the retire- ment of industrial properties, it is easy to understand that a count- less number of shapes of survivor curves is likely to be found in any study of curves from various industries. It is rather remarkable that in the collection of 176 curves more were not found which could not be reasonably well classified according to the 18 type curves. Of course, some of the classifications are poor agreements, but the departure from the types is not extreme. , In Fig. 24 are shown six curves of shapes which depart materially from the type curves and which have echaracteristies not commonly found. For comparison, the type curves which ‘they fit best are shown. Special attention is direeted to curves 134 and 141 which have high modes at 132 and 118 percent of average life, which modal location is far to the right of the average life for the height (or ex- tremely high for the position to the right of the average life), Curve 105 is unusual in that it represents a very high rate of retirement within the first 25 percent of average life; in fact the mode is prac- tically within the first year. : _ Additional collections of surviyor curves will probably bring forth other variations from what may be classed as the normal or typical survivor curve as exemplified by the 18 types; it is not ex- Pected that such curves will be numerous in comparison to those that do fall within the classifications set forth. FINAL VALUES AND EQUATIONS FOR THE 18 TYPE CURVES it is necessary to know the mathe- For certain theoreti s ain theoretical analyses, at exact frequen- matical equations of the 18 type curves in order th cies Taye BE determined for. a age-interval. Many Jaton a fitting the eurves were madeby the author, and by various ae os 4. mathematical expressions for all frequency curves were ae neThe although the final equations are not as satisfactory as desired. eOU OR Ob OH OOl OB OF OF _ ‘seamno eda} ony woay 2iy 2Ge4tan0 yo jueosed ‘2by op YPIYA ‘oouaLINoI0 UI JUENbeayUy S19 ‘seam peduys-yensnug— pz “Spt O22 O02 022.002 O81 OF Cel C2l OO 0? O02 OF C2? 9 io aff Diaio 6109 9G POWLBL JILIN-JONPIAL PL] FUDUINYGUOLL OTB ANT BL-GH PAID 2H] ey g 2botao 6ibak Of point hare $3/G09 PUNOAP AAP LL] 2-6} PAID “janine adky 8 cy WOAPYO-BO! key pua2iad ‘fousribatd Hit any a Sbisio soak G2 ebou1210 $100k DY ee oe ee Fe uo yous ree Bycidirii-uon) 2-§-PE) WAND 1-GO ania Qo | 8 ‘ey ‘anime adky £7 *aaano adk, i fomtt ae es 3 ay ah } a3 vboie10 siv2k ¢22| 2bo1e% 6.i02k Go} 8 yjialli HLIrr-peryIA{ely| — PPOMLBC wee fomehy ow FUBLBL ATOLL YOM D7 Sid BD HOD 1AGLLA, 2-[-lef MlND LD-GL/ PAID beprocesses and some actual calculations are given in Appendix B (page 110), together with a discussion of the several forms of ex- pressions and their adaptation to industrial-property survivor and frequency eurves. The equations of the 18 type frequency curves are given in Appendix A (page 98), and their derivation is explained in Appendix B (page 110). The survivor pereentages and probable lives in Table 21 (page 102) were obtained for each 5 pereent of average life by solving these equations for each 1 percent of rage life. These frequencies were then summed from maximum life to zero age to determine the percent surviving at each 1 percent of age. The probable life in pereent of average life was found by summing the percent surviving, starting at maximum life. The summation from maximum life to each 1 percent of age for 1 percent of average life was (1) divided by the corresponding percent surviving, (2) multiplied by 100, and (3) added to the corresponding age to get the probable life. To conserve space, only values for each 5 percent of average life are shown in Table 21. The probable average life at zero age should be exactly 100.00000 percent in Table 21, For the skew curves it is plus or minu this value. Tn adjusting the equation constants it was not found possible to secure the exact correct area for any average life. Consequently, these areas will vary with the length of interval chosen. r At this point the author simply wishes to point out that he had lit- tle sueeess with the Gompertz-Makeham formula in fitting the sur- vivor curves except for right-modal distributions. A more complete discussion of these conclusions is found in Appendix B (page 110) in the section on frequency graduation and curve fitting. The author 8 experience is not in agreement with that of Belcher! and Kurtz," who each report successful fitting, Belcher may have dealt primarily with rightmodal and J-shaped survivor eurves (curves with the mode practically at zero age). His identical methods when applied by the author to either left-modal or symmetrical distributions did not result in satisfactory fits. Kurtz’s seven types were nearly sym- metrical with three slightly left-modal. His ‘goodness of fit’? was not exceptional either, so that his work is far from being conclusive. This subject is important since some workers are extending stub curves by the Gompertz-Makeham formula. If this formula does not apply to all survivor curves, its use in the extension of a curves cannot be relied upon and some other method must be ae In actuarial practice the Gompertz-Makeham formula has been use in graduations of human life tables, but generally it has not been tsa No, 14,700, Inter- 21 "Depreciation Charges of Telephone Companies.” | Docket 20. a oe Commence Gomnuaission, Washington ae oe . ‘Mar. 19-21, 1928. (Testimony inted by American Telephone and Telex! =A .; Epwry Expectancy of Physical Property." pp. 119-121, +2 Kurvz, B. fe The Ronald Press Co., New York. 1930.76 applied to a complete range of life without a change in constants, In other words, the life table was graduated in three or more see- tions, each one separately with such constants as would fit the ob- Served statisties best. Present practice by insurance companies is to use means other than the Gompertz-Makeham formula in gradua- tions of their life tables, The Pearson types and the Gram-Charlier expression have also been recommended for frequency curves of the types encountered herein, but the author had little uecess in getting a direct fit with either of these expressions except for the symmetrical frequency curves. The rather high peak and abrupt drop from the mode ren- ders the skew curves difficult to fit with simple mathematical for- mulas. The equations on Pages 98 to 101, developed for the skew fre- quency curves, were compounded from the Pearson types. Refer- ence is made on page 120 to the details of fitting these curves. CHARACTERISTICS OF THE 18 TYPE CURVES Since the 18 types were obtained by averaging selected groups of the original 176 frequency curves, it follows that the types should Possess the characteristics of Survivor curves of all general classes of industrial Property assuming that the 176 curves are representative selections. Speeifie characteristics of the 18 types are given in Table 19. Taste 19.—Ctaracrerisrics or Tan 18 Type_Curves Mode Maximum life, percent | A, fe, pereent of x — of average lite fveruge life, | Normal ag, ‘ype Location, | Froquency, —normal renewals) percent curve Percent of | _ percent, Zero 0.00001 reached avenee for 10% of | frequency | frequency |within 100.1, life average life | ordinate | ‘ordinate erent L 6.243 445.53" 5 on .! 50 230.5 mn 7.481 824/18 50 210.5 oe bh 10.204 28686 50 190.5 a ke 0 | aoe | 240-58 0 20:5 a2 i : 520.5 . ts 113 30.308 206 04 1,020.5 5, 20 100.00 61.16 s 100/00 0300 one 87.55 & 100.00 200/00 360.5 pete & 100.00 200/00 490.5 53.03 s 100.00 790.00 $80.5 5155 x 100:00 180:00 1,820.5 AE . 10:00 170:00 4,400.0" iB 7.833 91 11.010 eee 0:8 Se:8r 164.51 520.5 53.89 153/08, 5 52.16 18748 ie 50,04ey, es LO I TT 77 General Shapes As the mode increases in height the ends of the frequency curves are drawn in toward the average life before they start to rise (Figs. 21, 22, and 23). The necessity for this is that the total frequencies cannot be greater than 100 percent, and since high-modal curves have large frequencies at the mode, modal frequencies cannot be- come greater without a lessening of the frequencies elsewhere. The high-modal curves have a greater concentration of frequencies in the region of average life, and their spread, or standard deviation, is therefore less than that of curves with lower modes. The type curves indicate that the location of the mode of skew curves approaches the average-life age as it becomes higher. This is true for both left- and right-modal groups. Thus, these skew curves have a tendeney to become symmetrical as the modal frequeney in- creases, It should also be observed (Fig. 25) that the modes of the skew curves can be connected with a smooth curve which becomes asymptotic to the ordinate at average life. Had this general rela- tionship not have been found, classification of the skew curves would have been extremely diffieult since the modal points might have fallen almost anywhere on the graph. . 4 The flatter the frequency curve the greater the maximum life; therefore the low left-modal curves have the greatest maximum lives. The high right-modal curves have relatively small maximum lives, even slightly smaller than those of symmetrical curves with the Same modal height. ‘ Since the type frequency curves as presented and diseussed ne all drawn to an age scale in pereent of average life and read at 10- bercent intervals, they correspond to a group of curves each Bee a 10-year average life, but different distributions of retirements eo no change in average life. As shown by other studies by the sue this distribution is quite important in determining the ee RS pereent** of groups of units. The distribution of retirement a al Ee ; the length of time required for a given UE NEINE: to reach no condition as well as normal age of the units. 4 In reading the discussions on renewal calculations of ae see curves, and also in use of the frequency, survivor, and pro ta As ae curves, it should be constantly kept in mind that the ante aoe ually presented on the basis of intervals of 10 percent S S Pore life, which, of course, correspond to an interval of 1 year for a pI ith 1 . ; val n be converted from a erty with 10 years average life. Any value ca rion, THU, 10-year ayerage life to any other average life by propo " : a . v al values would be for 5 years average life the frequency and renew 15 years two- just twice those for 10 years average life; those PR Property pees To be +2 WINFREY, Rorery. ‘Condition Percent of gndusteia) Proper curves are devel- published, Towa. Engr. Iixp. Sta, In this report condition-pericle Gives bublgnod, lows Burr fxp: State tole Tere sttes and ave =g al | & | 6 8 & | Symmetrical} types & s for 10% intervals & a percent 8 Vs & GLIBC, 8 Modal fre: & Eo atae eh IM bt ao wen se Tah 0207 ae AGE, Percent of average life Fig. 25.—Modal characteristics of the 18 type curves. thirds those for 10 years average life; ete. These ratios are Xe Pressed for equivalent ages in years, not in ages expressed in per cent of average life. “ i Renewal Calculations for the 18 Type Curves The renewal calculations for the 18 t: vi de by the . i ‘ype curves were made by method previously illustrated in Table ‘11 for type R,. The annual total renewals for these type survivor curves are shown in Table 22 (page 107), and for three curves in Fig. 26 for intervals of 10 percentug g20 hie 3 we g x 4 * & 8 45-4 e &o 5S ‘a Ry Z3 + BL Ry 4 ‘3 g 3 Pela t bof eZ le a ese) a 3s au“ oN fe . Normal avg agetite) |W & 10} ea : fee S © ary | ail Bie eis ft ie ei g B : ge é :: ¢ 8 Se x ge se | Rs Ly normal oge-F56 years gs? ee 53 normal age ~ 530 years eine Fy normal age- P32 years: 8 ~ af. * Toa S SF 3 —-— -- ce ay S. 5 fe wae | bo. 4 9) we Be, : 3 | he 2&0 260500 <0 2 40 60 80 100 20 HO 1G0 80 0 0 U0 Age, percent of average life Fig. 26.—Curves of total ren Of units in service for the La, Is and Ss type curves, presented as those obtained from the 18 type curves. ewals, average ame of retirements, and average, i ee of80 of average life. The table and the figure show that the renewal charac- teristics of all the type curves are of the same general nature. The curves tise from a zero value at zero age to a maximum value near the modal age, then fall below the normal annual renewal v: lue, about whieh the total renewal curve then oscillates. ‘The os , however, re- duce in magnitude until the eurve becomes a straight line at the nor- mal age. These curves are mathematically similar to a sine wave with a dampening factor which causes the positive and negative ampli- tudes to reduce to a common value—the normal annual renewals. Equations of the original 13 type renewal curves are given in Bulle- tin 103. As expressed before, the age at which a given frequency curve reaches normal renewals is contingent upon the number of decimals that are considered, but if the values be rounded off to 10-+0.1 percent (for 10 years average life) as is done in Table 19, Fig. 27 can be plotted. This figure shows that the modal frequeney has a great influence on the age at which normal renewals are reached (the curves designated by high type numbers, L,, R,, ete., also having high modes). In gen- eral, the higher the mode the greater length of time required to reach the age of normal renewals, Also, the closer the mode is to the maxi- mum age, the longer is the time required to reach normal renewals. Left-modal curves, L,, L,, and L,, for instance, reach normal condition at about 200 percent of average life, while the 1, does not reach the normal condition until after 1,000 pereent of average life. Right- modal curves require a longer time than corresponding left-modal curves. ye in if 882, Gf 44 cycies_| § & | e $2 * gy & 5 a ¢ the » ay uy 2b pighr-rodal tye 2 aol ee Zert— 17 she | oO a é 3 a é eo Yype-curve rumber His: 27-—Lite cycles required for thi t es to its, 27 © type curves Years avernad fenewale to within st O4 pubcent tee 4381 Wee OY ad 8 | % 3 | a T ® t © 8 eee 8 Normal average age, percent of over: 22 eg 9 oI s ® 3 a Type=curve rmuraber Wig. 28—Normal average age of the 18 type curves (10 years average life), Normal Age When a property has reached the normal condition, it would appear that the average age of the units in service and the average age of the normal number removed each year would be the same for all properties experiencing the same average life, but such is not the ease. Table 19 and Fig. 26 show these averages to be controlled by the shape of the distribution curve. From the renewals it is possible to caleulate the average age of the units in service at any time. For a given property maintained at a constant number of units in service and for a definite average life, as in the renewal caleulation (Table 11), this average age will vary from zero at the moment the original units are installed to ages greater than and less than the final normal value in much the same BE as the renewals themselves vary (Fig. 26). ‘The calculation of z oe average age is accomplished by determining the age of each of ae units in the property at the chosen date. The ages and number 0! units are taken from the renewal caleulation table. . For any property age, the number of units rematming ™ pene from each original group can be determined by subtracting e a newals shown on the horizontal lines (Table 11) from the fot ae installed that year (column 2). Tf this were done for the ent te ene and a new table made, the vertical columns of figures would then op resent the numbers in service at all ages of the original De i ages of the units themselves would vary from zero up = ie ema’ ene age represented by the survivor curve used in the cale —82 renewal table, except when the original property has not yet reached this maximum age. The average age of the units in serviee is ealeu- lated by the simple process of weighting the units by their ages. If the calculation is made for each year from age zero of the original prop- erty to the age when the normal condition is reached, an average-age curve ean be constructed as is shown in Fig. 26. The shape of the curve is affected by the survivor curve. Further, the normal age is also determined by the shape of the survivor curve. It is significant that the normal age hears no definite relation to the average life, but in the calculations for the 18 type curves this normal age for a 10-year average life varies from 5.03 for the S, type to 6.99 for the L, type (Table 19). The right-modal curves have normal ages slightly higher than corresponding symmetrical curves, but smaller than correspond- ing left-modal eury A straight-line survivor curve of 10 years av- erage life has a normal average age of 6.67 years. These normal av- erage ages for the type curves are shown in Table 19 and Fig. 28. The values in Table 19 are in percent of average life from which the nor- mal average age for any average life can be caleulated. Since the de- parture of the average age of the units in service from the average life is determined, not by the average life, but by the shape of the Survivor curve, a 20-year average-life curve would indicate a normal average life just twice that of the 10-year eurve, and a 25-year aver- age-life curve, 2.5 times that of the 10-year curve, ete, Of course, in a Property which is growing the average age of the seats would not stabilize and would always be less then the normal average age, assuming that the average life were held constant. If the units last to be installed rendered a different average life from the early units the average age would vary accordingly. When the num- er of units in service is allowed to decrease the average age of the units in service would inerease and might even reach a value greater than the average life, V. PRACTICAL APPLICATIONS OF THE 18 TYPE CURVES _ Unless a single unit of property or a group of units is to be depre- ciated 100 pereent during the first year of service, it is necessary to adopt Some means of distributing the depreciation charges over period of years or over a number of production units, Whether the Straight-line method, the Sinking-fund method, the present-worth method, or other methods are adopted for determining annual de- Preciation expense, it ig necessary to determine the period over which to spread the total depreciation charges. This period can best be Ctermined by experience, but for a new property it is not expedient to wait. for experienee hetore determining the probable average life Since, for accounting Purposes, depreciation charges should start roperty. The experience83 which is most useful is that of other companies or that obtained by the same company with previous service of similar units. For this reason, published probable average lives and service records of in- dustrial properties have great value to the cost accountant and comptroller. Once a probable average life is chosen and used in the depreciation of a property, it ean be modified from time to time as company experience indicates. Further, in determining present values of properties, as in engi- neering valuations, it is necessary to know the probable life of Various units or groups of properties for the purpose of determining their depreciation to date and fair present value. Here, again, it is the general experience of others with similar properties and the experience of the company in question that offer the best guides to a fair depreciation and fair present value as determined from a knowledge of probable lives and present and probable future service conditions. _In the execution of these two accounting and engineering prac- tices, the 18 type curves presented herein ean be of great value, be- cause they, in a relatively compact form, present the composite ex- perience of many types of properties and show the probable lives for these properties at all ages. They can be used to determine prob- able average life from retirement data, the probable life of an indi- vidual unit at any given age, as well as the probable distribution of retirements. In their use, however, individual expert judgment is not to be dispensed with. In reality, the type curves are presented to be used in connection with engineering judgment. DETERMINING PROBABLE AVERAGE LIFE OF GROUPS OF UNITS BY THE SURVIVOR-CURVE METHOD The survivor curve (or distribution curve) for any group of units represents the life history of that group for the years covered by the data. Therefore, it is an accurate picture of the distribution of retirements (‘‘death rates at all ages’’) and the average life ex- perienced. The area beneath a completed curve represents the total service rendered and, when divided by the number of units, gives the actual average life realized. In such case, however, the service of the group is completed and the average life is then of no value in determining current depreciation expense for the group, though it has value in that it records experience which ean be used in setting the depreciation rates of future or existing installations of similar units. For a survivor curve which is not completed to zero pereent surviving (a stub curve), a reliable method of predicting the extension. of the curve, in order that the probable average life can be determined, be of value in con- would be of great value. Particularly would it V in ¢ nection with the annual-rate, original-group, and multiple original-84 {SCAMS AOATA.INS Gms 07 Suypuodserios sear osurIAT SAGs AOJ UALVIP FY PUY UT KOAIND odAT——“GE “BLA 9uy SuyupUAD}9p uy pasN eq We YOT|A WI0s w Uy BAH Vesa” JUDAOMID TeX suoak ‘26y aHaAe? Pr 2A 2222 09 6G 29 VG 2G OF OF Ob tt 2 OP O6 26 bs 36 OC 02 22 12 22:02 GO SI = re T™ 7 } +07 fees Ee | 2akt NQ4 GaNIRI JONIAL se t ir t Ee : 2 oak aby > 62 92 22? 3% PO WU AA? * a Te Shecfeat ae if =) 9 cs! 2 a 8 SE K 8 Q 3 ly adh\uas hs ~ 3 ¢ SMARD AOA) “a 3 ‘ v > aN 3 ww = OB G2 = | SE x Ts al sy A 2217 Ee A Sy G10) \e ke #1 aeN Ie. ON Gey A\ es & Le She ay o She = TAY @ a. oy 1e a WR oe x OG CI = Acari85 group methods of constructing survivor curves, which methods fre- quently result in stub curves. The 18 type curves can be used for this purpose. The probable average life and type of distribution are selected without computa- tion other than the calculation and plotting of the stub curve for which the probable average life is wanted. The method involves simply plotting the survivor curve (stub or completed curve) to the Same scale that the 18 type curves are plotted using the ordinates m percent of the total number of units and the abseissas in years. For this method the type eurves need to be drawn for definite average lives, say, for each 5-year interval from 4 to 50, making about 10 pat- terns of the same type curve on a sheet, as illustrated by Fig. 29. x Lf these type survivor curves and the stub survivor curve for which the probable average life is wanted are each drawn on transparent graphs, the individual stub curve ean be superimposed on each of the 18 type sheets in turn mntil a satisfactory agreement is found. The stub curve is classified by the type curve which it fits best, and the probable average life estimated according to the position the individual curve occupies when superimposed upon the type sheet. Figure 29 shows curves 13-2 and 56-1 plotted on the Z, type sheet, By the location of curve 56-1 approximately parallel to the J5-year average-life type curve, it is readily seen that the stub curve 38 an L, type of about 13 years probable average life. As shown, stub curve 13-2 does not fit the L, type. In the upper right corner are curves for the R, type with curves 13-2 and 56-1 drawn in. Here it 18 seen that curve 13-2 parallels the R, 10-year average-life curve at about 11.5 years probable average life and that curve 56-1 does not fit. In comparing a stub curve with these type sheets it is best first to smooth it by eye, so that its location and shape are more definite than can be judged from the plotted points only. It is not feasible to work in percent of average life beeause the individual stub eurve whose probable average life is sought eannot ¢ so expressed. But since a given type curve has the same rela- tive distribution for any average life it is possible to plot it for any number of average lives and then to compare the individual stub curve with this series of curves to determine the probable average life and type of the stub curve. ‘The standards for each type curve as illustrated in Fig. 29 can be drawn to any suitable scale. That found satisfactory here was 10 inches to 100 pereent cee Fete the vertieal scale and 14 inch to 1 year for the horizontal a a pun paper used was a standard sheet, 11x1614 inches, rule divisions to the inch both ways. op The 18 type curves are expected to represent quite well oi ones vivor curves commonly encountered in utility and ae pa tices. For a given large organization, or for a group of Pace oa ganizations of similar purposes, it may prove feasible eee a set of standard curves embodying the company’s own experience.86 PROBABLE ERROR IN DETERMINING AVERAGE LIFE BY COMPARISON WITH THE TYPE CURVES Whether the probable average life determined for stub ee eurves by the method just described will agree with the ace ie of the groups of units as determined when the last ones a ee pends upon four general factors. First, the length of t ae thecese will affect the reliability of the answer for the reason tha’ 1 age mate made from a short curve is apt to be less accurate F if the made from a long or approximately complete curve. poeta he original curve available is regular and smooth in its Tae probability that the extension will coincide with the actual ean later years is greater than if the points scatter. For a ee Cone there exists doubt as to the location of the stub curve eae a known but seattered points, there naturally follows a dou ie ake accuracy of the extension, Third, if the future Bea oH feat remaining wnits follow a natural law, the extension of we a sable viver curve by the type-curve method is apt to be FAOTe, aliov than if the remaining units are retired by sudden change ae : an unusual development in the art of manufacture of z e ate change in the character of service required, or unusua reealll conditions which affect the rate and regularity of au ihe Fourth, the reliability of the data on which the stub eurve - aaet is a factor that will affect the probable accuracy of the ex a ee Small numbers of units observed, a high percentage of vaeacedidee tirements, and spasmodic observations and retirements will p an unreliable survivor curve, < Practical illustrations of the reliability of the method of uae type curyes in forecasting probable average lives of group a ties from the retirement experience of the units first to be eR ean be had by actually applying the method to the 176 se curves presented herein. This illustration may be open to the ‘hich tion that the comparison is made with the identical curves a ane Were used for the establishment of the types, but such objee . aha largely overruled by the fact that an independent study lin Second group of 111 survivor curves, numbers 66 to 176, resw Sie the confirmation of the original 18 types plus 5 additional ones in the Same families, ijn To make the test typical of the practices which must preva ae industrial applications of the method, the original rather sna Smoothed data were used. Two Separate tests were made, the ae using the 65 eurves from Bulletin 103 and the 13 original type curves. The second test was condueted with the new 111 survivor eurves an all 18 type curves, Tn making these tests, the ori of the 176 survivor curves were series of 18 charts similar to that ginal pereent-surviving data for ae Plotted to a scale corresponding ea t shown in Fig. 29, The first plotting,87 howe i : ately Fa ed eS oe ae between 100 and approxi- down to the level of appr ersecin DOE continued the data Enetcmitinued in eotnkEY imately 80 percent surviving. The plot- survivi d in this manner by 10-percent intervals to zero percent the atte ollowang each plotting, the smoothed stub eurves (for til mares) Sate) and the original data (for the second group of Slasaiication a compared with the standard type sheets and the ars Scared and probable average life recorded. These estimates ene Table 20 for the second test. Figure 30 shows the of th 16; ‘ror in the estimated average life for both tests for each ths test levels from 90 to 0 percent surviving. first paps used in the two tests was the same except that in the plotting a8 curve was drawn through the plotted points after each Rithe hi data down to the next percent-surviving level, while pani; fate test no curves were drawn. The former method is to be hid’ hate ed since the trend of the survivor curve is better defined omits 4 t aa to the type curves can be selected. The smoothing was nate all or a e latter case for the reason that it was desirable to elimi- sta ; evidence of what the previous estimate and classification was Th the test was moved down to the next level. of ie two significant results shown in Fig. 30 are: First, the average ca &. ae and overestimates of probable average life balanees close positi oe sade second, the average negative error and the average aed re error are about 10 pereent at the 70 pereent-surviving level aioe out 15 percent at the 80 percent-surviving level. For certain faa he however, individual estimates of probable average lives ae be greatly in error when compared with the average life deter- i ined from the completed curve. Such large errors are caused mainly by two factors: First, often the few data in the upper 10 to 30 per- ue of the survivor eurves are insufficient to definitely fix the curve rough this area especially when these few points do not follow a smooth path; second, the stieceeding data frequently depart from the trend established by the first few data. ‘A study of the classifiea- tions in Table 20 for curves 95, 96, 97, 99 405, and 149 illustrates these tendencies quite well. In fact, these curves account for several of the points in the upper diagram of Fig. 30 which are plotted at large percentage errors. The large negative error for curves 105 and 149 hold clear down to 20 percent surviving. ‘An examination of the right-hand column of Table 20 shows that the classification of the complete curve did not always agree with that given in the second column of this table, which elassifieation was made by using the generalized frequency eurves. This non-agreement can be accredited to the fact that many curves fall between two of the types and thus may be classified as either of the two. ‘This is particu larly true of those having high modes as between the left-modal and symmetrieal types and as between the right-modal and the symmetrical ‘odal curves as between, Say, the Ly types. It is also true of the low-m88 Taste 20.—Tyrr Cunve anp Averace Lire as Esrimarep py Comparine tHe Stop Curves Witn Tyrp Survivor Curves as Inpustratep in Fig. 29 Final, Estimated type curve and average life ee eee Lower limit of curve, percent surviving 5 s | 8 | 7 | 6 | 9 | 40 | 30 | 20 | 10 | 1 7 Is 8/11 | la 8 -1.2| In 6 @\t_ 8| ie 8| ts 7] Ia 7| La 7| ls 8 eal S\nwl i se s\n rim 5|k t do 3 Tag fer Sale Sida TS) 8) te | ta 8) in 8 te Fie oie ey » ; 7 | Lt a 53] 8 to Ta 1| 8|t 8| ie 8| te 7| ts 7] a: 7| te 8h iy 7 7. 8 8|In 9|T: 8| Is 8| Ls 8/2 8\ls 7 He] 2 2 rains Raia 4 |'Ee' 5 Eo S| Ie 5) te 8) i 8 eee ele ele gle ale ale ales) Ee ng ay ae ‘ | in 6 | Ti L i selnsla |e 8 In 8 Ee 8 | dn 8 | Ta 8 Ti 8| Lo 8 | End Ie 6 Ha- 6.4 Lo 8) Tx 6] In 6 | to 7| to 6| In 6| Lo 7] Lo G| Lo 6 | fo G Bait 3| be S| ti 6\t oli bl he 6 |b 6) wo] 0)» ane Sal ag [2k | ees |e | al 9 end ae Lo- 8. saree A Eq) 8) a 8 | Ended Wa 8.2) to 15) Li 8|t, 6| te 7| tr 8| x 8| to 8| Lo 8| Le 8| Em JS#10.2| Zn 20 | $: 10 | S 10 | Ss 10 | Ze 10| s: 10 | S210 | S 10) S: 10] S 10 Ha-37-9| 8: 15 | 8: 15 | Rs 15 | Rs 15 | Fa 18 | Ze 18 | Te aoe | Bowe Ra-22.7| Rs 22 | Ra 22 | Hy 20| Rs 22 | Rs 22 | Fs 22 Roe | Reet /s-27.1) Ss 28 | Ss 28 | Ri 26 | Ls 30 | Sz 28 | Re 26 8 | Re 8 Re 8.4) Re 9] Re S| S: 10] Ss 10] Re 9 | Re 9 % 1-0} Rs 11} x 10) Re 9| Rs 9} Ry 10 | Ended 8 ae |e alm 8) 8 | i's aa) e 8) 8 8) Abelead | i 20 2 19 20 | Enc Ri “| 8 10| Ls 7) 8 8) 8|s 8| er. 7| i 8|S 8|R 8 -6| 8 17 | Ha 14 | Endod ‘ 3} | m 6) 7|&% 7] me 6 aed “4 Le 5 | 6) 4 7| ia 8| ts 8 Ended 81 Si 35 | Be 32 | Le 31 | Ze 30 | Zi 30 81S: 30 | $: 31 | Rs 30 | R230 | Ra 28 & 22 9) 1 82) fe 40 | Re 80 Bs $0 | Re 2 | Re 45 | Ls 32 | Ly 25 | 1. 26| La 26 8 20 Ss 33) 1140 | Ri 28 | Ry 22 | He 21 Ended St 14 | Li 20] Re 18 | Re 20 | Ri 13. Ended Rr 40 | Re 25 | Rs 22 | Ls 19 | Le 18 Ss 13 10 Ris! R14| R14) s 12] s 1 Bde S19 | Rs 15 | 8; 20] 8; 20] S: 20 Lh $210) & 14) S14 | Zi 17 Si 4 a 25| R: 20 | L420 | Ry 17 | Se 18 In 8 |b 4} 4} me 4| i 4 rs Ry Rs 14 | Ls 19 | S: 20| Ls 20| Le 20 20 #38 | B20 | we 2 | 1 30 B19 his 3. a 4 18 20 Re 109- 4} Rs-20.3| Re 20 | Ss 30 Re 20 | Re 20 | Re 20 20 MO- 5/Rs-19.6) Fa 35 | Rs 33] He 19 | Zs 21 | Re 20 5 i Be 2 M1- /8.-19.6) Re 34 | Ry 22 20| Re 9 UZ SiBe18.3) ke 17 | Be te | Ft op | Be 38 | Se 28 Bib HS-28)L5-14-0) S 12 | 8 13 | R12 | Ze 12 | bs 14 Sa 10 H4-24)Le-10.6] —— | Re 10.| Re 10 | #10 | Za 10 Ended 115-25)Le-11.7) Re 10 | 8) 12 | Za 12 | 2h 11 | St 1h $:-19.0} 8 14 | Ze 13 | 22 19 | Tn 20 | Ended Ferto.4) So 48 | B12 | Ego | Be 2 | dete | ra 13 | Zo 12 | Zo 13 | Ended 15-4) Ky 16 | Bs 15 | L219 | Ended 2s-20.0) 1 20 | tindea | “2 '?89 ee ee Conve anp Avprace Lire as EstiMatep BY Companine THE Stup 3 Win Tyrn Survivor Curves as Innusrraten ty Fa. 29 (Continued) Estimated type curve and average life ‘ ‘Lower limit of curve, percent surviving so | 70 | 6 | 50 | 40 "30. | 20 | 10 | 0 S: 18 | Ended | Ended Te 30 | Re 20 | Rs 20 | Rr 19| Sz 20} Rs 19) Rs 19 Si 19 | Zn 14| S14] Si 14 | Se 14 | Si 14 | Sr UA Ended Ri 18 | Es 19 | Bs 10 | Re 20 | Re 18 | Re 18 | Ma 18 Fe is | Hs 18 | Bs 18 | Re 18 | Rs 18 | Ended FMB | Be 26 | Re 25 | Rs 26 | Rr 26 | Bs 26 | Re 26 Rs 26 | Re 26 | Rs 26 | Ri 27 | Re 29 Rs 26 Re 26 Ri 26 | Re 26 | Re 26 | Re 26 | Re 26 Re 2 Bi 30 | Rs 30 | Re 30 | Ended Ri 25 Bi za | Be 23 | Rs 26 | Re 26 | Ri 26 ‘Re 30 FE 30 | 2s 30 | Rs 30 | Hi 80 | Ended Ty 14 | Er 12 | Ee 13) La 15 | La 15 Ended roa | La 22 | Zs 22 | Lx 22 | Le 22 Fi 5s | g: 25 | Se 25 | S: 25 | Ended S30 | ta 22 | Lr 22 | La 22 | La 21 ra o7 | me 22. | Bo.22| Re 24 | Be 24 | Re 23 | He 24 | Be SH Ry 23 Bs 19 | Re 20 | Ra 20 | Bs 20 Rs 10 | Rs 15 | Re 18 | Re 18 R18 Ry 12 | Ry 15 | Ri 16 | Ri 16 Ry 16 | Rs 15 | Re 15 | Ri 15 | Ri 15 Ry 80 | Ry 30 | Rs 30 Ended Be 80 | Be BO) Be 90.1 Ep8eS | e--5 | a 8 | Bo) 6)) Be 8) 8 Lo 15 | Lo 18 | So 14 | So 14 Ended a eas Ze 0 Bo] ss] & 8] Se 9 | So 9 | So 10 . 30 2 | $30 | So a0) Ended) | | i 8 | ta 10 | So 10) S 11 |S 10 In 37 | ez 34 | Zn 40 | Binded Sp 24 | La 28 | Ls 28 Re 25 | Re 25 eReuleg i i a= | m3 Rs 20 | Re 38 = |S Ret | Rol 5 La 20 | 8» 20 1] Be 42 | Bs 36 Re 36 | Re 35 A) Be ae | Be oe | Be oe ‘Sc 37 | 5 37 a] Be 18 | Re 13 | Be 19 Ry 20 | 2 20 So 8: 8 | Re 8] Re 8 Ro8|R 8 8] —— | Ss 8 |S 8 & 8| a 8 Ty 9| R10) Rs 9 Es 10 tn 10 20] Le 9 | Re 10 | Rs 9 da 10) fs 10 8] Ss 10 | Rs 12 | Re 12 Te ae 0} Rs 13 | Za 15 | La 13 a 8) Re 17 | 11 20 | Re 13 | Se 14 | Se 18 | Be 1 Rs 13 Ty 14 | Te 34 +8) Re az | to 20) Bs 18 | PO | Th te | da ae | Be 36 | Te Op Bh 39 | Hinde WERUERICEIEHIER CElES Ee lha| Bi .3} La 12 | Re 11 et Ty 10 | Le 10 Ta 10 | La 10 T, 10 | la th 4 10 I lnulun|on|mo| oa) ee) et dnt | Lo 32 | Pee eu eRlERIER ERS le RIE RES 8] Se ta | Bld | Be AT | Ge a2 | fe 2 | Le 10 | Le 1D Hio| Hw) Be Ea 0 | B38 | He 10 | Bo 10 | Za 10 | Zo 10) Ze Bu ln 49 lh Is 38 | In 8| | 90 ‘0t ‘423: wade a eee? b al zy a8 8 8 % 8 2 | a & x Lower end of stub surviver curve used, percent surviving 8 =i 49} f 30) 20 average terror ie 9 Average ret error 7 ia ° levee i “GO -50 -40 -30 -2 0 10.8030. 40. DOE i Fercerit less than acrual Percent greater tharr actual Error in estimated average life Fig. 30—(Lower) Errors in estimatin; ve lives of th frst 69 original curves by comparing stub Raia en rea Teneths with the type survivor curves in the form shown in Fig. 29, (Upper) Same for Cur’ e