A Repair-Time Limit Replacement Policy With Estimation Error

Abstract

In this article, we consider a repair-time limit replacement policy with estimation error. If a system fails, we estimate the repair time to recover the system failure. In reality, the estimation error occurs in the estimation of repair time. Considering the estimation error, we formulate the repair-time limit replacement policy and obtain analytically the long-run average profit rate and the total discounted profit. We obtain numerically the optimal repair-time limits to maximize the long-run average profit rate and the total discounted profit. Numerical examples are experimented to find trends of the optimal repair-time limit and the effect of model parameters on the optimal repair-time limit.

Keywords:

• Estimation error
• Long-run average profit rate
• Repair-time limit
• Total discounted profit

Mathematics Subject Classification:

• 60K10
• 62N05
• 90B25

Acknowledgments

This work was supported by the Korea Research Foundation Grant Funded by the Korean Government (MOEHRD) (The Regional Research Universities Program/Research Center for Logistics Information Technology).