A Decision-making Framework for Repair vs Replacement of a Multi-Component System Subject to Environmental Shocks

SUMMARYThis paper considers a repairable system, which can be either repaired or replaced when a failure occurs, and earns income as a function of its operation time. The main aim of the current paper is to develop a dynamic decision-making framework to decide whether a failed system has to be repaired or replaced by a new one. The decision is made based on the mean profit of the repair and replacement scenarios. The most profitable scenario would be the output of the framework. The dynamicity of the strategy backs to the fact that it can alternate between repair and replacement depending on the system’s state. The framework is also dynamic in the sense of time because the system’s income, and the repair and penalty costs are functions of time. The mean profit is constructed based on the system’s income, the repair and purchase cost, the imposed costs regarding the system's shut downtime and repair time, and the waiting time for the delivery of a new system. The cost factors are considered functions of time and the repairs are assumed to be imperfect. To apply the proposed framework when the system breaks down, the responsible engineer needs two inputs to make the decision: the meantime to repair and the degree of repair by the repairman. Given the inputs, if the benefit of replacement is more than the benefit of repair, the system should be replaced; otherwise, the system should be repaired. Some numerical results and a real-world example are presented to assess the behavior and illustrate the application of the proposed framework.