What is the replacement problem?

What is the replacement problem?

Replacement problems involve items that degenerate with use or with the passage of time and those that fail after a certain amount of use or time. Items that deteriorate are likely to be large and costly (e.g., machine tools, trucks, ships, and home appliances).

What is equipment replacement?

The customary approach to the equipment replacement problem emphasizes the physical deterioration of the existing equipment. The main concept is to replace the equipment when the cost of operating and maintaining it become sufficiently high, in net expected present value terms, to substantiate a replacement.

What are the reason for replacement of equipment?

(i) Whether the present equipment has become obsolete due to technological developments, (ii) If the present equipment is inadequate in meeting increased product demand. (iii) Whether the present equipment has deteriorated due to wear and tear.

What is a replacement problem when does it arise?

replacement problems are concerned with the situations that arise when some items such as men, machines and usable things etc need replacement due to their decreased efficiency, failure or breakdown. Such decreased efficiency or complete breakdown may either be gradual or all of a sudden.

What are the types of replacement situation?

The replacement situations generally are divided into the following four types: (1) Replacement of capital equipment whose performance decreases with time, e.g., machine tools, vehicles in a transport organization, airplanes, etc. (2) Group replacement items that fail completely, e.g., electrical bulbs, etc.

Are repairs to office equipment an expense?

Repairing and maintaining office equipment is an immediate expense. If a large expenditure is made to improve office equipment, that cost would be recorded as an asset and then depreciated over the remaining life of the equipment.

In which an item is replaced immediately after it fails?

Under this policy, an item may be replaced immediately after its failure. Group replacement policy. Under this policy, the items are replaced in group after a certain period, say t, irrespective of the fact that items have failed or not.

What is individual replacement problem?

The problem is to determine an optimal value of ‘t’ so as to minimize the total cost involved in the system. We shall consider the following two types of replacement policies: Individual replacement policy: Under this policy, an item is replaced immediately after its failure.

Where does the problem of equipment replacement occur?

The problem of equipment replacement is a routine phenomenon of industrial enterprises. Normally, it is experienced in systems where machines, individuals or the capital assets are the main job performing units.

How are Management Studies done in equipment replacement?

Bulk of management studies have been done in equipment replacement. The customary approach to the equipment replacement problem emphasizes the physical deterioration of the existing equipment.

When is it necessary to replace an item?

It is possible that the nature of item which requires replacement may be such that immediate replacement is not available or possible. Thus there is necessity of formulating some appropriate replacement policy in such cases. Whenever any item fails, it should be immediately replaced.

When do you need to replace an equipment?

(vi) If the present equipment is polluting or spoiling working condition of the industry. (vii) Possibility of performing additional operations by new machine. (viii) Does the present equipment make noise and vibrations and thus causing diversion of the workers. (ix) How often the present equipment requires maintenance and repairs.