Lesson 2 - Replacement Models Flashcards
arises when any one of the components of
productive resources, such as machinery, building, and personnel,
deteriorates due to time or usage.
The problem of replacement
The main objective of the replacement
is to help
organizations maximize their profit or minimize their cost.
This occurs as the life of
the machine increases or
due to continuous usage
Gradual Failure
In this case, the items ultimately fail after a period
of time.
Sudden failure
The probability of failure
increases with the
increase in the life of an
item.
Progressive Failure
Some items will have a higher
probability of failure in the beginning of
their life, and as time passes,
chances of failure become less.
Retrogressive failure
A constant probability of failure is associated with items that fail from random causes.
Random failure
Bathtub curve where Failures are more frequent in this stage, similar to how a baby needs time to adjust to
its new environment.
Infant Stage or Early failure stage
Bathtub curve where Failures may occur due to operational errors, heavy load, or voltage fluctuations, but
these can be managed with repair and preventive maintenance.
Youth stage or Random failure stage
Bathtub curve where frequent failures indicate that replacement of the machine or equipment may be
necessary.
Old Age stage or Wear out Failures
This involves the process of replacing items such as machine tools,
transport, and other vehicles that experience a decrease in operating
efficiency due to aging or continuous usage.
Replacement of Capital Equipment
involves replacing components such as electric bulbs, transistors,
and electronic components that fail suddenly and randomly.
Replacement of Items that fail completely
This problem requires knowledge of life distribution for service of staff in
a system.
Replacement of Human beings in Organization (Staffing problem)
This involves replacement of existing units due to the availability of more effective
and advanced technology.
Miscellaneous Problems
Costs that depend on the item’s age or choice
are considered in replacement decisions.
Cost Consideration
The key criterion in replacing items with deteriorating
efficiency
Efficiency Measurement
As time and usage increase, maintenance costs
rise.
Maintenance Cost
When replacing an item, various alternatives
are compared based on running and maintenance costs to select
the optimal choice.
Alternative Choices
Techniques for Analysis
a) Replace items with increasing maintenance costs over time, with constant
money value.
(b) Replace items with increasing maintenance costs and changing money value over time.
(c) Use the concept of present value to compare alternative choices.
It is the current value of future expenses or income.
Present Value (PV)
Is a Single payment present worth factor. It
shows how much a future payment or expense is worth in today’s money.
Present Worth Factor (PWF)
Helps in determining
how much needs to be saved or invested annually to reach a future
financial goal.
Uniform Annual Series Present Worth Factor (PWFS)
This policy states that replace the item
soon after its failure. Here the cost of
replacement will be somewhat greater as the
item is to be purchased individually from the
seller as and when it fails. From the time of
failure to the replacement, the system
remains idle.
Individual Replacement Policy
In this case, all the items, even if they are in good
working condition, are replaced at a stipulated
period as calculated by the organization by using..
Group Replacement Policy
states that a large
population is subjected to a given mortality law for
a very long period of time.
Mortality Theorem
