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.
Types of replacement problems:
Various types of replacement problems :
(a) Replacement of Capital equipment, which loses its operating efficiency due to aging (passage of time), or due to continuous usage (due to wear and tear of components).
Examples are: Machine tools, Transport and other vehicles, etc., Here the system can maintain the level of performance by installing a new unit at the beginning of some unit of time (year, month or week) and decide to keep it up to some suitable period so as to minimize the operating and maintenance costs.
In this case the deterioration process is predictable and is represented by an increased maintenance cost and decreased in scrap cost and increased production cost per unit.
In such cases the optimum life of the item is determined on the assumption that increased age reduces efficiency. Deterministic models explain the problem and they are very much similar to that of inventory models where deterioration corresponds to demand against the desired level of efficiency (level of inventory).
The cost of new item is similar to cost of replenishment of inventory and maintenance cost corresponds to cost of holding inventory.
These types of problems are solved by two methods. They are:
(b) Group replacement or Preventive maintenance technique for these items and these are expensive to replace individually. Examples are: Electric bulbs, Transistors, Electronic components etc., Here replacement of items is done in anticipation of failure, which is known as preventive maintenance.
(c) Replacement of human beings in organizations, known as Staffing problem, or known as Human resource planning or Mortality and Staffing problem. This problem requires the knowledge of life distribution for service of staff in a system.
(d) Miscellaneous problems such as replacement of existing units due to availability of more effective and new and advanced technology.
(e) In these problems replacement will become necessary due to research of new and advanced and more effective technology and old technology becomes out of date.
GENERAL APPROACH TO SOLUTION TO REPLACEMENT PROBLEM
Though it is not possible or it is difficult to predict the time of failure of an item exactly, likely failure pattern could be established by observation.
Generating the probability distribution for the given situation and then using them in conjunction with relevant cost information we can formulate the optimum replacement policy.
The information necessary to formulate optimum replacement policy is:
(a) Actual cost of the item,
(b) Direct costs of labour involved in replacement,
(c) Costs of disruption in terms of lost production, lost orders etc.,
