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„ When existing units may have outlived their effective lives and it
may not be economical to allow the to continue in the organisation
„ When the existing units may have been destroyed through accident
or otherwise



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„ meplacement of capital equipment that become worse with time e.g.

machine tools, buses in transport system etc.
„ Group replacement of items which fail completely e.g. bulbs,
electronic equipments etc.
„ Problem of mortality and staffing
„ Other miscellaneous problems
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› ost to be considered
› When the replenishment is justified
1. munning cost and
2. apital cost of purchasing
meplacement policy for items whose maintenance cost increases with
time and money value is not counted


 The cost of maintenance of a machine is given as a
function increasing with time and its scrap value is constant
(a) If time is measured continuously, then the average annual cost
will be minimized by replacing the machine when the average
cost todate becomes equal to the current maintenance cost
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n
Total cost incurred on the item Fn = 0mt dt + ›


verage total cost = Fn / n

   
1. Money value
2. Present worth factor
3. Discount rate
 

     
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 large population is subject to a given mortality law for a very long

period of time. ll deaths are immediately replaced by births and
there are no other entries or exits. Then
Mortality Theorem: the age distribution ultimately becomes stable and
that the number of deaths per unit time becomes constant which
is equal to the size of the total population divided by the mean age
at death.




  

 
   item is replaced after its failure

 !


  " decision to be taken when the items are to
be replaced irrespective of the fact that items have failed or not
!


  

 :

 
(a) One should group replace at the end of the ith period if the cost of
individual replacement for the ith period is greater than the
average cost per unit through the end of the ith period
(b) One should not group replace at the end of ith period if the cost of
individual replacements at the end of (i -1)th period is less than the
average cost per period through the end of ith period.
 ’ 
  

 
„ meplacement policy for items whose maintenance cost increases
with time and money value is not constant
„ meplacement policy for items whose maintenance cost increases
with time and money value is not constant
„ mecruitment and promotion problems
„ Equipment renewal problem
  machine owner finds from his past records that the costs
per year of maintaining a machine whose purchase price is
ms. 6 are as given below:

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) *&&& *+&& *-&& *1&& +,&& +3&& ,-&& -&&&
 

 ) ,&&& *.&& 0.& ,0. +&& +&& +&& +&&
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t what age is a replacement due?