Replacement theory is used to decide when to replace used equipment with new, improved equipment. It considers factors like equipment deterioration over time, failures, technological advancements, and increased demand. There are several replacement models that take different factors into account, such as how equipment ages and becomes outdated, the availability of newer machines with better usage, the depreciation of equipment value over time, and replacing groups of items that fail completely after use. Replacement theory helps determine the optimal time to replace equipment to minimize costs and maximize benefits.

1. Replacement Theory
SUBMITTED TO:- SUBMITTED BY:-
Mr. Sachin mahendru Krishna kr. Thakur
Roll- 75134014
B.tech (ME) 8th sem

2. Replacement theory
 The Replacement Theory in Operations Research is used in the
decision making process of replacing a used equipment with
subsitiute.
 mostly a new equipment of better usage.
 The replacement might be necessary due to the deteriorating
property or failure or breakdown of particular equipment.

3. Nature of selection problem
• Capital equipments, which deteriorate with time, for example, trucks
of a transport agency, lathe machine, etc.
• Items which fail completely. These are handled under group
replacement policy, for example, electric bulbs, electronic items, etc.
• staffing problem.

4. Why it required
• Due to New developments the Current equipments has become technical
problem.
• The Current Equipment has become unusable.
• Regular improvement of technology.
• Increaseing demand of goods and product.

5. Model-I: Aging of Machines
• Items that deteriorate with time e.g. machine tools,
vehicles, equipment buildings .

6. • Items becoming out-of-date due to new developments like ordinary
weaving looms by automatic, manual accounting by tally, computers,
cars ...
Model-II: Availability of Similar New
Machines with Better Usages

7. Model-III: Time Value of Machines
• Items which deteriorate with time
• The depreciation of money is considered in calculations

8. Model-IV: Group Replacements
• Items which do not deteriorate but fail completely after certain
amount of use like electronic parts, street lights.

9. Example
• A machine requires higher operating cost.
• A transport vehicle such as car requires more and more maintenance
cost.
• A railway timetable becomes more and more out of date with
passage time.