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Quantifying the risk in age and block replacement policies

Author

Listed:
  • B C Giri

    (Jadavpur University)

  • T Dohi

    (Hiroshima University)

Abstract

Preventive maintenance policies have been studied in the literature without considering the risk due to the cost variability. In this paper, we consider the two most popular preventive replacement policies, namely, age and block replacement policies under long-run average cost and expected unit time cost criteria. To quantify the risk in the preventive maintenance policies, we use the long-run variance of the accumulated cost over a time interval. We numerically derive the Risk-sensitive preventive replacement policies and study the impact of the Risk-sensitive optimality criterion on the managerial decisions. We also examine the performance of the expected unit time cost criterion as an alternative to the traditional long-run average cost criterion.

Suggested Citation

  • B C Giri & T Dohi, 2010. "Quantifying the risk in age and block replacement policies," Journal of the Operational Research Society, Palgrave Macmillan;The OR Society, vol. 61(7), pages 1151-1158, July.
    • Handle: RePEc:pal:jorsoc:v:61:y:2010:i:7:d:10.1057_jors.2009.40
    DOI: 10.1057/jors.2009.40
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    References listed on IDEAS

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    1. Richard Barlow & Larry Hunter, 1960. "Optimum Preventive Maintenance Policies," Operations Research, INFORMS, vol. 8(1), pages 90-100, February.
    2. Pulley, Lawrence B., 1981. "A General Mean-Variance Approximation to Expected Utility for Short Holding Periods," Journal of Financial and Quantitative Analysis, Cambridge University Press, vol. 16(3), pages 361-373, September.
    3. Levy, H & Markowtiz, H M, 1979. "Approximating Expected Utility by a Function of Mean and Variance," American Economic Review, American Economic Association, vol. 69(3), pages 308-317, June.
    4. John G. Wilson, 1996. "A Note on Variance Reducing Group Maintenance Policies," Management Science, INFORMS, vol. 42(3), pages 452-456, March.
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    Cited by:

    1. Jiang, R., 2018. "Performance evaluation of seven optimization models of age replacement policy," Reliability Engineering and System Safety, Elsevier, vol. 180(C), pages 302-311.
    2. Jingyi Zhao & Chunhai Gao & Tao Tang, 2022. "A Review of Sustainable Maintenance Strategies for Single Component and Multicomponent Equipment," Sustainability, MDPI, vol. 14(5), pages 1-22, March.

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