Replacement Policies for Components that Deteriorate

For many industrial processes the cost of a component failing in service is sufficient to warrant replacement before failure, but intensive operation of the processes restricts replacement opportunities. A model is proposed where at each opportunity replacement is optional. Dynamic programming methods are used to show that for components that deteriorate as they are used, the best policy is to replace the component if its age exceeds a control limit otherwise to defer replacement.Numerical results are given when the time to failure of the component has a gamma distribution and replacement opportunities occur at random, or are entirely regular. A "rule of thumb" is given for calculating the control limit, and it is shown to be nearly optimal.