THE MARGINAL COST-ANALYSIS AND ITS APPLICATION TO REPAIR AND REPLACEMENT POLICIES

The concern of this paper is twofold: (i) elaboration on the role of t he marginal cost analysis (MCA) method in the study and optimization o f maintenance policies; (ii) the study of a repair and replacement pol icy where the decision whether to repair a failed item or replace it i s based on the repair costs: those encountered now and those anticipat ed in the future (the policy is an extension of another one which base s this decision solely on the present repair costs). The situation of incomplete information on the underlying life distribution is also con sidered in which case a Bayesian inference procedure is associated to the failure process and its results incorporated into the repair or re place decision process at failures. These two goals are interlinked in that on one hand the repair and replacement policy is analyzed and op timized by using the MCA, and on the other hand this provides yet anot her illustration for the application of the MCA and its adaptability t o model and policy generalizations.