REPLACEMENT MODELS

1. REPLACEMENT THEORY
BY
NAVATHA.K(Ass.Prof)
MSC,MPHIL,BEd

2. REPLACEMENT THEORY
The Problem of replacement is felt when the job
performing units such as men,machines,
equipments,parts,etc.become less effictive or useless
due to either sudden or gradual deterioration in their
efficiency, failure or brekdown, By replacing them with
new ones at frequent intervals, maintenance and other
overhead costs can be reduced. However such
replacements would increase the need of capital cost for
new ones.

3. Example 1:
• A vehicle tends to wear out with time due to
constant use.more money needs to be spent
on it on account of increased repair and
operating cost. A stage comes when it becomes
uneconomical to maintain the vehicle and it is
better to replace it with a new one. Here the
replacement decision may be taken to balance
the increasing maintenance cost with the
decreasing cost of the vehicle as time passes.

4. Example 2.
• Incase of highway tube lights where time of
failure is not predictable for individual tubes,
replacement is done after individual
failure.However,it may be economical to
replace such tubes before their failure on a
schedule basis.Here the replacement decision
may be taken to balance between the wasted
life of a tube before failure and cost incurred
when tube fails completely during service.

5. Thus the basic problem in such situations is to formulate a
replacement policy to determine an age (or period)at which
the replacement of the given machinery/equipment is most
economical keeping in view all possible alternatives.
In this chapter we shall discuss the replacement policies in
the context of the following three types of replacement
situations.

6. 1.Items such as machines,vehicles,tyres,etc.whose
efficiency deteriorates with age due to constant use increased
operating and maintenance costs.
2.Items such as light bulbs and tubes,radio and television
parts, etc which do not give any indication of deterioration
with time but fail all of sudden and become completely
useless.
3.The existing working staff in an organization gradually
reduces due to retirement, death,retrenchment and other
reasons.

7. 1.Failure mechanism of items
[i]Gradual failure
[ii] Sudden failure.
1.Gradual failure:
Gradual failure is progressive in nature. that is as the life of an item
increases, its operational efficiency also deteriorates resulting on
1.Incresed running costs
2.Decrease in productivity
3.Decrease in the resale or salvage value.

8. 2 Sudden failure
• This type of failure occurs in items after some period of
giving desired service rather than deterioration while in
service.The period of giving desired service is not constant
but follows some frequency distribution which may be
Progressive,retrogressive or random in nature.
• If the probability of failure of an item increases with the
increase in its llife.tubes and light bulbs.
• If the probability of failure in the beginning of the life of an
item is more but as time passes the chances of its failure
become less.
• Failures from random causes,physical shocks,not related to
age.vaccum tubes in air-borne equipment have been found
to fail at a rate of the age of the tube.

9. 1.Replacement of items deteriorates with time
• When operational efficiency of an item
deteriorates with time(gradual failure),it is
economical to replace the same with a new
one.Besides,there could be a number of
alternative choices and one may like to
compare available alternatives on the basis of
the running costs involved.

10. 2. Replacement of items that fails suddenly
• Uncertainty
• Difficult to predict that a particular equipment
will fail at a particular time
• Probability of distribution of failures.

11. 3.Staff replacements
• Related to human beings working in an
organization
• Applied to formulate some useful recruitment
and promotion policies for the staff
• We assume that life distribution for the
service of staff is already known