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Replacement Analysis
MUHAMMAD IRFAN
Assistant Professor, Sarhad University, Peshawar.
MAINTENANCE…
OBJECTIVES OF MAINTENANCE…
CAUSES FOR EQUIPMENT BREAKDOWN…
WHAT TO DO WITH AN EXISTING ASSET?
 Keep it
 Abandon it (do not replace)
 Replace it, but keep it for backup purposes
 Augment the capacity of the asset
 Dispose of it, and replace it with another.
REPLACEMENT…
REPLACEMENT ANALYSIS…
Replacement Analysis in needed for the following
Reasons:
Reduced Performance: It results in increased costs
(reliability, productivity).
Altered Requirements: New features (speed,
accuracy, etc).
Obsolescence: New products and developments.
IMPORTANT TO LEARN…
 Defender: The existing alternative.
 Challenger: The new alternative.
…OR…
Existing Asset is known as the
DEFENDER
New Asset is known as the
CHALLENGER.
IN OTHER WORDS…
DEFENDER is the Asset already
Owned…
While…
CHALLENGERS are the alternatives
with which the already owned asset is
compared with…
REPLACEMENT…
Using the equipments, as time passes, the new
question arises as;
Should the in-place alternative be replaced?
If so, With What and When?
means,
 Has the Economic Life of the Asset been Reached?
 Which alternative should be selected as its
replacement?
REASONS FOR REPLACEMENT…
1. Reduced Performance.
Due to,
- Deterioration of Parts
- Reliability and Productivity Decrease.
- Increased Cost of Operation.
- Higher Scrap.
- Higher Maintenance Costs and
- Need to Replace…
CONT…
2. Changing Requirements.
- New Requirements on;
- Accuracy
- Speed
- Other Specifications like pollution reduction etc. that
may not be met by the existing asset.
CONT…
2. Obsolescence.
- New Technological Innovations make existing
assets obsolete.
- The decrease in the time of the development
cycle of new products causes replacement
analysis to be performed before the completion
of expected economic life of assets.
REPLACEMENT ANALYSIS DETAIL…
When should a new truck replace the existing truck?
When should a process be redesigned?
When should a product be redesigned?
Defender: the existing equipment, building, or
decision previously implemented.
Challenger: the proposed replacement currently under
consideration.
The most common question asked in industry is:
When should the existing asset(s) be replaced?
ISSUES TO CONSIDER BEFORE STARTING…
 Is it morally or ethically right to do this project?
 If a unit fails, must it be removed permanently
from service? Or repaired?
 Are standby units available if the system should
fail?
 Do components or units fail independently of the
failure of other components?
 Is there a budget constraint?
CONT…
 Is there only one replacement allowed over the
planning horizon?
 Do future replacement units differ over time?
 Are technological improvements considered?
 Are periodic operating and maintenance costs
constant or variable over time?
 Are consequences other than economic impacts, i.e.,
socio-technical issues considered?
 Are income tax consequences considered?
 Is inflation considered?
Thank You…

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(Week 8)

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  • 2. Replacement Analysis MUHAMMAD IRFAN Assistant Professor, Sarhad University, Peshawar.
  • 5. CAUSES FOR EQUIPMENT BREAKDOWN…
  • 6. WHAT TO DO WITH AN EXISTING ASSET?  Keep it  Abandon it (do not replace)  Replace it, but keep it for backup purposes  Augment the capacity of the asset  Dispose of it, and replace it with another.
  • 8. REPLACEMENT ANALYSIS… Replacement Analysis in needed for the following Reasons: Reduced Performance: It results in increased costs (reliability, productivity). Altered Requirements: New features (speed, accuracy, etc). Obsolescence: New products and developments.
  • 9. IMPORTANT TO LEARN…  Defender: The existing alternative.  Challenger: The new alternative. …OR… Existing Asset is known as the DEFENDER New Asset is known as the CHALLENGER.
  • 10. IN OTHER WORDS… DEFENDER is the Asset already Owned… While… CHALLENGERS are the alternatives with which the already owned asset is compared with…
  • 11. REPLACEMENT… Using the equipments, as time passes, the new question arises as; Should the in-place alternative be replaced? If so, With What and When? means,  Has the Economic Life of the Asset been Reached?  Which alternative should be selected as its replacement?
  • 12. REASONS FOR REPLACEMENT… 1. Reduced Performance. Due to, - Deterioration of Parts - Reliability and Productivity Decrease. - Increased Cost of Operation. - Higher Scrap. - Higher Maintenance Costs and - Need to Replace…
  • 13. CONT… 2. Changing Requirements. - New Requirements on; - Accuracy - Speed - Other Specifications like pollution reduction etc. that may not be met by the existing asset.
  • 14. CONT… 2. Obsolescence. - New Technological Innovations make existing assets obsolete. - The decrease in the time of the development cycle of new products causes replacement analysis to be performed before the completion of expected economic life of assets.
  • 15. REPLACEMENT ANALYSIS DETAIL… When should a new truck replace the existing truck? When should a process be redesigned? When should a product be redesigned? Defender: the existing equipment, building, or decision previously implemented. Challenger: the proposed replacement currently under consideration. The most common question asked in industry is: When should the existing asset(s) be replaced?
  • 16. ISSUES TO CONSIDER BEFORE STARTING…  Is it morally or ethically right to do this project?  If a unit fails, must it be removed permanently from service? Or repaired?  Are standby units available if the system should fail?  Do components or units fail independently of the failure of other components?  Is there a budget constraint?
  • 17. CONT…  Is there only one replacement allowed over the planning horizon?  Do future replacement units differ over time?  Are technological improvements considered?  Are periodic operating and maintenance costs constant or variable over time?  Are consequences other than economic impacts, i.e., socio-technical issues considered?  Are income tax consequences considered?  Is inflation considered?