PLANNED REPLACEMENT ON A BUDGET,
RAND CORP SANTA MONICA CALIF
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In many situations the failure of equipment while in operation is undesirably costly, or hazardous. For such reasons it may be prudent to institute a policy of planned replacement of units before they fail. However, the costs of such a policy must be militated against the costs of operational failures. In all likelihood, moreover, the over-all system costs will be constrained to fall within a given budgetary allocation. To study the question of frequency of planned replacement under a budgetary constraint, a probabilistic criterian is developed. Attention is directed to those situations in which average system cost is not as important as staying within a fixed budget. Only non-sequential policies are examined although the notions are extensible to the more general case.