Bahir Dar University

Bahir Dar Institute of Technology

Faculty of Mechanical and Industrial Engineering

Master’s Program in Industrial Engineering

(Production Engineering and Management)

Maintenance and Reliability Engineering Assignment on

Replacement analysis

Prepared by:

Gashaw Sishagne……ID……………................BDU1302146

Submitted to: Dr. Bereket Haile, (PhD)

Submission Date: 23/3/2022 G.C.

Bahir Dar, Ethiopia

 Maintenance and Reliability Engineering

Contents
Part 1: Replacement analysis .................................................................................................................. 1
Part 2: Reliability, Maintainability and availability............................................................................. 9

Part 1: Replacement analysis

1. Machine A, costs Br 180,000 and the maintenance and operating costs are estimated at Br
4000 for the first year, increasing by Br. 40,000 per year in the second and subsequent years.
Similarly, machine B costs Br. 200,000 and the maintenance and operating costs are Br 8000 for
the first year, increasing by Br 16000 in the second and subsequent years. If we now have a
machine of type A, should we replace it by B? If so when? Assume both machines have no resale
value and future costs are not discounted (no time value of money).

Given data and information’s:

Assume both machines have no resale value and future costs are not discounted (no time value of
money).

Machine A

Capital cost (C):- Br. 180,000

Maintenance and operating cost for 1st year (Ut) = 4,000Br

And increase by Br 40,000 per year after second year

Machine B

Capital cost (C) = Br. 200,000

Maintenance and operating cost for 1st year (Ut) = Br 8,000

And increase by Br 16,000 per year after second year.

Required: If we now have a machine of type A, should we replace it by B? If so when?

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 Maintenance and Reliability Engineering
Solution: The total cost incurred on the item during period ‘y’ = Capital cost + total maintenance
cost in the period ‘y’ - Scrap value.

= C + M(y) – S where, M(y) = ∑ ( )

Hence average cost per unit of time incurred during the period ‘y’

G(y) = [(C + M(y) –S)/y] …………………Eq (1)

Then the replacement analysis result is put in table below which done by Microsoft
excel.

Replacement analysis for machine A

Year U(t) M(y) C S T(y) G(y)

1 4000 4000 180000 0 184000 184000

2 44000 48000 180000 0 228000 114000

3* 84000 132000 180000 0 312000 104000*

4 124000 256000 180000 0 436000 109000

5 164000 420000 180000 0 600000 120000

6 204000 624000 180000 0 804000 134000

7 244000 868000 180000 0 1048000 149714.29

8 284000 1152000 180000 0 1332000 166500

Machine A replaced at the end of 3rd year and average cost is 104,000 birr.

Replacement analysis for machine B

Year U(t) M(y) C S T(y) G(y)

1 8000 8000 200000 0 208000 208000

2 24000 32000 200000 0 232000 116000

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 Maintenance and Reliability Engineering
3 40000 72000 200000 0 272000 90666.667

4 56000 128000 200000 0 328000 82000

5* 72000 200000 200000 0 400000 80000*

6 88000 288000 200000 0 488000 81333.333

7 104000 392000 200000 0 592000 84571.429

8 120000 512000 200000 0 712000 89000

Machine B replaced at the end of 3rd year and average cost is 104,000 birr.

The star shows the minimum average cost of machines as per calculations, and G(y) of machine
A less than G(y) of machine B. so, machine A should be replaced by machine B. The machine A
is replaced by machine B at the time (age) when its running cost of the next year exceeds the
lowest average yearly cost Birr 80000 of machine B.

Total costs of machine A in the successive years are as following:

Year 1 2 3 4 5
Total cost 184000 228000 – 184000 312000 – 228000 436000 – 312000 600000 – 436000 =
in the year = 44000 = 84000 = 124000 164000

The running cost of 3rd year of machine A is 84000 which is more than the lowest average cost
of yearly of machine B (80000). So machine A should be replaced by machine B when its age is
2 years so machine A is one year old from now. Since machine A replaced after one year from
now.

2. Solve question number 1, if the time value of money of 5 % is assumed.

Other given data is 5% discount rate

Discount factor = 1/ (1-i)

y-1 ……………Eq(2)

Replacement analysis for machine A

Discounted Cumulative Weighted
Discount maintenance discount average
Year U(t) factor cost Total cost factor Annual cost
1 4000 1 4000 180000 1 180000

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 Maintenance and Reliability Engineering

2 44000 0.9524 41905.6 221905.6 1.9524 113657.857

3* 84000 0.907 76188 298093.6 2.8594 104250.4022*
4 124000 0.8638 107111.2 405204.8 3.7232 108832.4022
5 164000 0.8227 134922.8 540127.6 4.5459 118816.428
6 204000 0.7835 159834 699961.6 5.3294 131339.663
7 244000 0.7462 182072.8 882034.4 6.0756 145176.5093
8 284000 0.7107 201838.8 1083873.2 6.7863 159714.8962

Machine A replaced at the end of 3rd year and its minimum average cost is Birr 104250.40

Replacement analysis for machine B

Discounted Cumulative Weighted
Discount maintenance discount average
Year U(t) factor cost Total cost factor Annual cost
1 8000 1 8000 180000 1 180000
2 24000 0.9524 22857.6 202857.6 1.9524 103901.6595
3 40000 0.907 36280 239137.6 2.8594 83632.09065
4 56000 0.8638 48372.8 287510.4 3.7232 77221.315
5* 72000 0.8227 59234.4 346744.8 4.5459 76276.38091*
6 88000 0.7835 68948 415692.8 5.3294 77999.92494
7 104000 0.7462 77604.8 493297.6 6.0756 81193.23194
8 120000 0.7107 85284 578581.6 6.7863 85257.29779

Also machine B replaced at the end of 5th year and its minimum average cost is Birr 76276.38.
Minimum average cost of machine A is less than minimum average cost of machine B. That birr
104250.40 less than birr 76276.38. so machine A should be replaced by machine B.

The machine A is replaced by machine B at the time (age) when its running cost of the next year
exceeds the lowest average yearly cost Birr 76276.38 of machine B.

Total costs of machine A in the successive years are as following:

Year 1 2 3 4 5

Total 184000 221905.6 – 184000 298093.6 – 221905.6 405204.80 – 540127.60 – 405204.80

cost in = 41905.6 = 76188 298093.80 = = 134922.80
the 107111.20
year

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 Maintenance and Reliability Engineering

The running cost of 3rd year of machine A is 10711.20 which is more than the lowest average
cost of yearly of machine B (76276.38). So machine A, should be replaced by machine B when
its age is 3 years.

3. A machine costs Br 50,000. The maintenance and operating costs are Br 2,500 for the first five
years. In the sixth and succeeding years operating cost increases by Br 500 per year. Assume a
10 % value of money per year find the optimum length of time to hold the machine before we
replace it.

Given data: Capital cost (C) = Br 50,000

Maintenance and operating cost for 1st year (Ut) = Br 2,500 for five year.
In the sixth and succeeding years operating cost increases by Br 500 per year.
Discount rate = 10% = 0.1

Required: Find the optimum length of time to hold the machine before we replace it.

Solution: then we can calculate the minimum average cost of the machine and can know the
optimum replacement age of machine which shows in the table below.

Replacement analysis of machine

Discounted Cumulative Weighted
Discount maintenance discount average
Year U(t) factor cost Total cost factor Annual cost
1 2500 1.0000 2500 50000 1 50000
2 2500 0.9091 2272.7273 52272.727 1.9091 27380.9524
3 2500 0.8264 2066.1157 54338.843 2.7355 19864.0483
4 2500 0.7513 1878.2870 56217.13 3.4869 16122.6029
5 2500 0.6830 1707.5336 57924.664 4.1699 13891.2549
6 3000 0.6209 1862.7640 59787.428 4.7908 12479.6678
7 3500 0.5645 1975.6588 61763.086 5.3553 11533.1615
8 4000 0.5132 2052.6325 63815.719 5.8684 10874.4316
9 4500 0.4665 2099.2832 65915.002 6.3349 10405.015
10 5000 0.4241 2120.4881 68035.49 6.7590 10065.8752
11 5500 0.3855 2120.4881 70155.978 7.1446 9819.48622
12 6000 0.3505 2102.9634 72258.942 7.4951 9640.87438
13 6500 0.3186 2071.1003 74330.042 7.8137 9512.79416

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14 7000 0.2897 2027.6507 76357.693 8.1034 9422.97126

15 7500 0.2633 1974.9844 78332.677 8.3667 9362.44809
16 8000 0.2394 1915.1364 80247.813 8.6061 9324.54939
17 8500 0.2176 1849.8477 82097.661 8.8237 9304.21259
18 9000 0.1978 1780.6020 83878.263 9.0216 9297.54114
19* 9500 0.1799 1708.6585 85586.922 9.2014 9301.49858*
20 10000 0.1635 1635.0799 87222.001 9.3649 9313.69415
21 10500 0.1486 1560.7581 88782.76 9.5136 9332.22945
22 11000 0.1351 1486.4363 90269.196 9.6487 9355.58669
23 11500 0.1228 1412.7287 91681.925 9.7715 9382.54585
24 12000 0.1117 1340.1379 93022.062 9.8832 9412.12249
So, as per calculation the optimum length of the time to hold the machine before we replace it is
after 18th year.

4. Truck tires, which fail in service, can cause expensive accidents. It is estimated that a failure
in serviced tire results in an average cost of Br 50,000 exclusive of the cost of replacing the burst
tire. New tires cost Br 20,000 each and are subject to mortality as in table on next page. If the
tires are to be replaced after a certain fixed mileage or on failure (whichever occurs first),
determine the replacement policy that minimizes the average cost per kilometer.

Assumptions:-

(i) The failure occurs at the midpoint of the range given in the table i.e. exactly at 11000,
13000, 15000 …

(ii) (ii) Initially let there be 1000 tires.

(iii) (iii) Up to the age of 10000 kilometers proportion of tires fails = 0. The proportion of
failure from 11000 to 13000 miles is 0.030.

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 Maintenance and Reliability Engineering

Given data:

Individual replacement cost = Br.50, 000

Group replacement cost = Br.20, 000

Initial number of tires (No) = 1000 tires

Required: Determine the replacement policy that minimizes the average cost per kilometer.

Solution

Now calculate the number of tires

N0=1000 tires

N1= number of tires replaced at the mid of 10001-12000 or 11,000km

N1=number of tires at the beginning *probability that a tire fails during 11,000km drive

N1=1000x0.02=20 tires

N2=number of tires to be replaced at the mid of 12001-14000 or 13000km

N2=N0P2+N1P1 =1000x0.035+20x0.02=35 tires

N3=N0P3+N1P2+N2P1

N3=1000x0.063+20*0.035+35.4x0.02 =64 tires

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 Maintenance and Reliability Engineering
N4= N0P4+N1P3+N2P2+N3P1

N4=1000x0.1+20x0.063+35.4x0.035+64.408x0.02 =104tires

N5= N0P5+N1P4+N2P3+N3P2+N4P1

N5=1000x0.22+20x0.1+35.4x0.063+64.408x0.035+103.79x0.02 =229 tires

N6= N0P6+N1P5+N2P4+N3P3+N4P2+N5P1

N6=1000x0.345+20x0.22+35.4x0.1+64.408x0.063+103.79x0.035+228.56 x0.02 =365 tires

N7= N0P7+N1P6+N2P5+N3P4+N4P3+N5P2+N6 P1

N7=10000x0.205+20x0.345+35.4x0.22+64.408x0.1+103.79x0.063+228.56x0.035+365.2x0.02

=248 tires

N8= N0P8+N1P7+N2P6+N3P5+N4P4+N5P3+N6 P2+N7P1

N8=1000x0.012+20x0.205+35.4x0.345+64.408x0.22+103.79x0.1+228.56x0.063+365.2x0.035+

247.97x0. 02=85tires

Then the optimum replacement policy can be selected by summing individual and group costs in
the table below.

Cost per
Age of tire 2,000
at Total cost of group replacement, individual km Total
failure(Km) replacement + group replacement cost cost/period
11000 (20x50,000) + (1,000x20,000 )= 21,000,000 Br 21,000,000
13000 (20+35)x50,000+(1,000x20,000) = 22,750,000 Br 11375000
15000 (20+35+64)x50,000+(1,000x20,000) = 25,950,000 Br 8,650,000
17000* (20+35+64+104)x50,000+ 1,000x20,000 =31,150,000 Br 7,787,500*
19000 (20+35+64+104+229)x50,000+ 1,000x20,000 =42,600,000 Br 8520000
21000 (20+35+64+104+229+365)x50,000+ 1,000x20,000= 60,850,000 Br 10,141,667
23000 (20+35+64+104+229+365+248)x50,000+(1,000x20,000) = 73,250,000 Br 10464285.71
25000 (20+35+64+104+229+365+248+85)x50,000+(1,000x20,000)= 77,500,000Br 9687500

So, as shown above table group replacement policy is selected and the minimum cost is at 17000
km i.e. birr 7787500.

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 Maintenance and Reliability Engineering

Part 2: Reliability, Maintainability and availability

1. A machine is operational for the past one year (365 days or 52 weeks), the machine was
up and running for 6500 hours. The machine has been stopped by system-downing
preventive maintenance, once in every month that took a total of 50 hours. During the
year there were five major failures that needed corrective maintenance interventions as
shown below:

In addition, during the same year, the mean administrative and other logistics delay was 200
hours.
Determine the inherent, achieved, and operational availability of the air-conditioning system.

Given data: Total up time = 6500 hours

Preventive down time = 50 hours

CM downtime = 650 hours

Number of failures in the system = 5

Number of system downing, PMs = 12

Mean logistics = 200 hours

Then according to the given data calculate the required parameters for inherent availability,
achieved availability and operational availability as MTBF, MTTR, MTBM, M, and MDT.

MTBF =

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 Maintenance and Reliability Engineering

=1300 hours

MTTR =

= 10 hours

MTBM =

= 382.35 hours

M=

=
=41.18 hours

MDT = M + Mean logistic and administrative delays

= (41.18 + 200) Hours

= 241.18 hours

Ai =

=
= 0.9923 or 99.23%

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 Maintenance and Reliability Engineering

Aa =

=
= 0.9633 or 96.33%

Ao=

= 0.8179 or 81.79 %

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