Preventive replacement with defaulting

Abstract

Abstract This paper models age replacement and block replacement when there is the possibility of defaulting on the planned maintenance. A default occurs when a planned preventive replacement is not executed, and we discuss how defaults can arise in practice. Our aim is to study the robustness of block replacement and age replacement, bearing in mind that (a) these policies are frequently used in practice, (b) in the standard scenario (no defaulting) age replacement has a lower economic cost rate than block-replacement and (c) block replacement is simple to manage because component age does not have to be monitored. We model defaults as independent Bernoulli trials. We prove that a cost-minimizing critical age for replacement in the age policy with defaulting exists if the time to failure distribution has an increasing failure rate. A numerical study of the policies indicates that: age replacement is effective if maintenance control is good, that is, when there is only a small chance of defaulting; block replacement is relatively robust to defaulting (postponement), but less so to lack of knowledge about component reliability.