An operating system is subject to random shocks that arrive according to a nonhomogeneous Poisson process and cause the system failed. System failures experience to be divided into two categories: a type-I failure (minor), rectified by a minimal repair; or a type-II failure (catastrophic) that calls for a replacement. An age-replacement model is studied by considering both a cumulative repair-cost limit and a system's entire repair-cost history. Under such a policy, the system is replaced at age T , or at the k-th type-I failure at which the accumulated repair cost exceeds the pre-determined limit, or at any type-II failure, whichever occurs first. The object of this article is to study analytically the minimum-cost replacement policy for showing its existence, uniqueness, and the structural properties. The proposed model provides a general framework for analyzing the maintenance policies, and presents several numerical examples for illustration purposes.Ann Oper Res (2011) 186:317-329 S k Arrival instant of the kth shock for k = 1, 2, 3, . . . W i Minimal repair cost due to the ith type-I failure for i = 1, 2, 3, . . . G(w) cdf (cumulative distribution function) of the r.v. (random variable) W i c w Mean cost of W i ; c w = E[W i ] Z j Accumulated repair cost until the j th type-I failure; Z jcdf of the r.v. Z j ; the j -fold Stieltjes convolution of the distribution G with itself M Number of shocks proceeding the first type-II failurē P k , p k sf (survival function), pmf (probability mass function) of M; P k = P (M > k) = Pr{first k shocks are type-I failures}, where the domain ofP k is {0, 1, 2, . . .} and 1 =P 0 ≥P 1 ≥P 2 ≥ · · ·;Pr{a type-I failure when shock k arrives} =P k /P k−1 θ k Pr{a type-II failure when shock k arrives} = 1 − q k T Replacement age of an operating system L Total repair-cost limit B(T ; L, {P k }) s-expected cost rate for an infinite time spanCost of a planned replacement c 1Cost of an unplanned replacement Y Waiting time until the first unplanned replacement (kth type-I failure at which the accumulated repair cost exceeds the pre-determined limit L or first type-II failure) when T = ∞ h(t), H (t) pdf (probability density function), cdf of the r.v. Ȳ H (t) sf of Y , which is 1 − H (t) r H (t) Failure (hazard) rate of Y ; r H (t) = h(t)/H (t) U i Length of successive replacement cycle for i = 1, 2, . . .
V iOperational cost over U i D(t) s-expected cost of the operating system over [0, t]