ABSTRACT
In this work, an approach to estimate the optimal strategy to replace groups of assets is discussed. The model includes parameters such as cost of economic depreciation, cost of decommissioning and probabilistic distributions to represent random variables (for instance, time between failures) and uncertainty in cost of failures. This simulation model helps to understand the trade-off relationship between cost and availability according to the possible replacement strategies available. We present and discuss how Markowitz effective frontier can be created based on the simulated values for different replacement strategies. This work can fill a gap in the literature concerning the problem of asset group replacement, which are not well explored, but is important for decision-makers dealing with real world problems. The approach presented also helps the asset replacement strategy, which is part of the operational strategy, to be more flexible to support the high level business strategy.
