# Replacement Models : Self Test Questions

#### Theory

1. What is replacement? Describe some important replacement situations.

2. Explain the different types of replacement models.

3. Write a short note on staffing problem.

#### Practical

1. A firm is considering replacement of a machine whose cost is Rs. 12,200 and the scrap value is Rs. 200. The maintenance cost found from experience to be as follows:

Year 1 2 3 4 5 6 7 8
Maintenance cost (Rs.) 200 500 800 1200 1800 2500 3200 4000

When should the machine be replaced?

2. The initial cost of a machine is Rs. 6100 and resale value drops as the time passes. Cost data are given in the following table:

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 Year Maintenance Resale Value 1 2 3 4 5 6 7 8 100 250 400 600 900 1200 1600 2000 800 700 600 550 500 450 410 380

When should the machine be replaced?

3. The following table gives the running costs per year and resale price of a certain equipment whose purchase price is Rs. 5000.

Year 1 2 3 4 5 6 7 8
Maintenance Cost (Rs.) 1500 1600 1800 2100 2500 2900 3400 4000
Resale Value (Rs.) 3500 2500 1700 1200 800 500 500 500

At what year is the replacement due?

4. The following mortality rates have been observed for an electronic component:

Month 1 2 3 4 5 6
% failure at the end of the month 8 22 45 70 85 100

There are 1500 items in operation. It costs Rs. 20/- to replace an individual item and 50 paise per item, if all items are replaced simultaneously. It is decided to replace all items at fixed intervals and to continue replacing individual items as and when they fall. At what intervals should all items be replaced?

5. The following mortality rates have been observed for a certain type of light bulbs:

Week 1 2 3 4 5
% failure at the end of the week 10 25 50 80 100

There are 1000 bulbs in use, and it costs Rs. 1/- to replace an individual bulb which has burnt out. If all bulbs were replaced simultaneously, it would cost 25 paise per bulb. It is proposed to replace all bulbs at fixed intervals, whether or not they have burnt out and to continue replacing burnt out bulbs as they fail. At what intervals should all the bulbs be replaced?

6. A team of software developers at www.universalteacher.com is planned to rise to a strength of 50 persons, and then to remain at that level. Consider the following data:

Year Total % who have left upto the end of the year
1 5
2 36
3 56
4 63
5 70
6 75
7 80
8 85
9 90
10 100

On the basis of above information, determine:

What is the recruitment per year necessary to maintain the strength? There are 8 senior posts for which the length of service is the main criterion. What is the average length of service after which new entrant can expect his promotion to one of these posts?

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