The document discusses a replacement policy for items, stating that items are replaced immediately upon failure or can be collectively replaced at predetermined times. It compares costs between group replacement of all transistors at 30 paisa each and individual replacement at Rs. 1.25 each. The document includes average costs associated with various group replacement policies.

7. Under this policy, an item is replaced immediately after its failure.
Under this policy, we take decision as to when all the items must be
replaced, irrespective of the fact that items have failed or have not failed,
with a provision that if any item fails before the optimal time, it may be
individually replaced.

15. Now, as we know that group replacement of all the 1000 transistors at one go cost 30 paisa per
transistors and the replacement of individual transistors on failure cost Rs.1.25, the average cost
for different group replacement policies are given as under: