Replacement Model


Replacement model is the part of operation research mostly used in the industries when a purchased items like machinery, buildings efficiency is reduced or wear out due to much usage.

Replacement model:

The problem of replacement arises when any one of the components of productive resources, such as machinery, building and men deteriorate due to time or usage. The examples are:

(a)   A machine, which is purchased and installed in a production system, due to usage some of its components wear out and its efficiency is reduced.

(b)   A building in which production activities are carried out, may leave cracks in walls, roof etc., and needs repair.

(c)    A worker, when he is young, will work efficiently, as the time passes becomes old and his work efficiency falls down and after some time he will become unable to work.

The loss of production hours is more expensive factor for the manufacturing unit. Hence, the management must take interest in maintain the production facility properly, so that facility's available time will be more than the down time.

  •          In general, when any production facility is new, it works with full operating efficiency and due to usage or of time, it may become old and some of its components wear out and the operating efficiency of the facility falls down.
  •          To regain the efficiency, a remedy by, namely maintenance is to be attended.
  •          The act of maintenance consists of replacing the worn out part, or oiling or overhauling, or repair etc.
  •          In modern industrial scene, the presence of highly sophisticated machinery in manufacturing system will bother the manager, when any one of the facilities goes out of order or breakdown.
  •          Because of the breakdown of one of the facility, the entire production system may be affected.
  •          This is particularly true in batch manufacturing system and continuous manufacturing system·        
  •          All the production facilities are subjected to deterioration due to their use and exposure to the environmental conditions.
  •          The process of deterioration, if unchecked or neglected, it culminates and makes the facility useless.
  •          Hence, the management has to check the facilities periodically, and keep all the facilities in operating condition.
  •          Once the maintenance is attended, the efficiency may not be regained to previous level but a bit less than that of previous level.
  •          This is an ongoing business of the management. After some time, the efficiency reduces to such a level, the maintenance cost will become very high and due to less efficiency the unit production cost will be very high and this is the time the management has to think of replacing the facility.


Thus the problem of replacement is experienced in systems where machines, individuals or capital assets are the main production or job performing units. The characteristics of these units is that their level of performance or efficiency decreases with time or usage and one has to formulate some suitable replacement policy regarding these units to keep the system up to some desired level of performance

We may have to take different type of decision such as:


(a) We may decide whether to wait for complete failure of the item (which may result in some losses due to deterioration or to replace earlier at the expense of higher cost of the item,

(b) The expensive item may be considered individually to decide whether we should replace now or, if not, when it should be reconsidered for replacement,

(c) Whether the item is to be replaced by similar type of item or by different type for example item with latest technology

The problem of replacement is encountered in the case of both men and machines. Using probability, it is possible to estimate the chance of death or failure at various ages.

 The main objective of replacement is to help the organization for maximizing its profit or to minimize the cost.