Replacement analysis
REPLACEMENT ANALYSIS
It is necessity to maintain the equipment
in good operating conditions with economical cost. The organizations need an
integrated approach to minimize the cost of maintenance. In certain cases, the
equipment will be outdated over a period of time.
If an organization wants to be in the
same business competitively, it has to take decision on whether to replace the
old equipment or to retain it by taking the cost of maintenance and operation
into account.
Mostly retaining the old machine by
maintenance would be uneconomical to continue production. Hence, the machines are
to be periodically replaced.
Sometimes, the capacity of existing
facilities may be inadequate to meet the current demand. Under such situation,
the following alternatives will be considered.
Replacement
of the existing equipment with a new one.
Augmenting
the existing one with an additional equipment.
Types of Replacements
Replacements
can be classified into two categories:
(a) Replacement of assets that
deteriorate with time (Replacement due to gradual failure, or wear and tear of
the components of the machines).
This
can be further classified into the following types:
(i) Determination of economic life of an
asset.
(ii) Replacement of an existing asset
with a new asset.
(b) Simple probabilistic model for assets
which fail completely (replacement due to sudden failure).
