An Economic Replacement Model

Abstract

The report is based on a study of the replacement of Army vehicles. These vehicles are currently phased out of service by a system of decision rules called repair limits. Existing repair limit systems, although superior to group replacement policies, appear to be sub-optimum.A theory of repair limits is proposed. This leads to the determination of optimum repair limits by a simulation method. A second optimization method is introduced based on the use of certain frequency distributions which are found to represent the repair cost data.The results show that the methods proposed can be expected to lead to financial savings.