A sequential scheme to estimate the optimal age replacement policy

Abstract

Consider a system which is subject to failure and must be replaced when this occurs. If it costs less to replace the system in advance before failure, it may be advantageous to use an age replacement policy. However, the optimal age to replace the system is unknown if the underlying failure distribution is unknown. This paper develops a scheme to update the current estimate of the optimal age replacement policy in an on-line fashion and simultaneously controlling costs by reducing system failures.

Keywords:

• Age replacement policies
• hazard rate
• Nelson-Aalen estimator

^∗Research supported by NPS Research Foundation

^∗Research supported by NPS Research Foundation

Notes

^∗Research supported by NPS Research Foundation