Introduction:
Replacement model is the part of operation research mostly used in the industries when a purchased items like machinery, buildings efficiency is reduced or wear out due to much usage.
Replacement model:
The problem of replacement arises when any one of the components of productive resources, such as machinery, building and men deteriorate due to time or usage. The examples are:
(a) A machine, which is purchased and installed in a production system, due to usage some of its components wear out and its efficiency is reduced.
(b) A building in which production activities are carried out, may leave cracks in walls, roof etc., and needs repair.
(c) A worker, when he is young, will work efficiently, as the time passes becomes old and his work efficiency falls down and after some time he will become unable to work.
The loss of production hours is more expensive factor for the manufacturing unit. Hence, the management must take interest in maintain the production facility properly, so that facility's available time will be more than the down time.
Thus the problem of replacement is experienced in systems where machines, individuals or capital assets are the main production or job performing units. The characteristics of these units is that their level of performance or efficiency decreases with time or usage and one has to formulate some suitable replacement policy regarding these units to keep the system up to some desired level of performance
We may have to take different type of decision such as:
(a) We may decide whether to wait for complete failure of the item (which may result in some losses due to deterioration or to replace earlier at the expense of higher cost of the item,
(b) The expensive item may be considered individually to decide whether we should replace now or, if not, when it should be reconsidered for replacement,
(c) Whether the item is to be replaced by similar type of item or by different type for example item with latest technology
The problem of replacement is encountered in the case of both men and machines. Using probability, it is possible to estimate the chance of death or failure at various ages.
The main objective of replacement is to help the organization for maximizing its profit or to minimize the cost.