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As an equipment or item, which is made of a number of components ages with time, it deteriorates in its functional efficiency and the performance standard are reduced. However, in real life situation there are many such items whose performance does not deteriorate with time but fail suddenly without any warning. This can cause immense damage to the system or equipment and inconvenience to the user. When the item deteriorates with time, one is expecting reduced performance but other items, which may fail without being expected to, stop performing, can create a lot, of problems. A minor component in an electronic device or equipment like TV, fridge or washing machine, costs very little and may be replaced in no time but the entire equipment fails suddenly if the component fails. Hence the cost of failure in terms of the damage to the equipment and the inconvenience to the user is much more than the cost of the item.

If it is possible to know exactly the life of the component it is possible to predict that the component and hence equipment is likely to fail after performance of so many hours or miles etc. This is the concept of preventive maintenance and preventive replacement. If the equipment is inspected at laid down intervals to
know its conditions, it may not be possible to expect the failure of the item. The cost of failure must be brought down to minimum” preventive maintenance is cheap but avoids lots of problems. In many cases, it may not be possible to know the time of failure by direct inspection. In such cases the probability of failure can be determined from the past experience. Finding the Mean Time Between Failure (MTBF) of the equipment in past is one good way of finding this probability. It is possible by using the probabilities to find the number of items surviving up to certain time period or the number of items failing in a particular time period.

In situations, when equipment/item fails without any notice, two types of situations arise.

  1. Individual Replacement Policy. In this case an item is replaced immediately when it fails.
  2. Group Replacement Policy. In this policy all the items are replaced irrespective of the fact whether the item have failed or not, of course, any item failing before the time fixed for group replacement is also replaced.