A Preventive Replacement Policy for Units Subject to Intermittent Demand

We propose a preventive replacement policy for a unit that is in demand only part of the time and is inactive otherwise. Under this policy, called a modified age replacement policy, the unit is replaced preventively at the first no-demand period at which its operational age exceeds some control limit. We use a marginal cost analysis to find the optimal control limit that minimizes the limiting conditional probability that the unit is down when it is demanded. We then compare the optimal limiting conditional probability that the unit is down when it is demanded for the modified age replacement policy and the age replacement policy.