MG6863 Engineering Economics
Unit 4 Replacement and Maintenance analysis
Part-A
1.
What is meant by replacement analysis?
It involves the replacement of existing obsolete or worn out assets
in order to avoid failure in operations.
The problems often faced by management
of various industries are whether to replace the existing equipment with new
and more efficient. This class of decision analysis is known as replacement
analysis.
2.
What are the types of replacement problem?
(a)
Replacement of assets that deteriorate with time. This can be
further classified into two types.
(i) Determination of economic life of an asset
(ii) Replacement of asset with a new asset
(b)
Simple probabilistic
model for assets which fails completely.(Replacement due to sudden failure)
3.
How to determine the economic life of an asset?
By using capital cost, operating cost and total cost the economic life of an asset can be determined.
It is defined to be the period of useful life that minimizes
the annual equivalent cost of owning and operating the asset.
4.
Explain capital recovery cost.
It is computed from the first cost (initial investment/purchase price) of the machine.
5.
Explain operating costs.
The operating costs of an asset include operating and maintenance costs, labour costs, material costs, and energy consumption costs.
It tends to increase as a function of the age of the asset.
6.
What is meant by maintenance analysis?
Maintenance is concerned with the day to day problem of keeping production facilities and equipment in proper operating condition.
7.
Name the types of maintenance.
(i) Corrective or breakdown maintenance
(ii) Scheduled maintenance
(iii) Preventive maintenance
(iv) Predictive maintenance
8.
State any two advantages of breakdown maintenance.
(i)
Delays in production
(ii)
Faster plant deterioration
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