On The Use of Replacement Model to Determine the Appropriate Time to Replace a Deteriorating Industrial Equipment

Mechanically, all industrial equipments get deteriorating with time and usage and their functions decreased efficiently. In order to manage such equipments, it requires higher operating and maintenance cost, as a result of this increasing repair and maintenance cost, there is a need to replace them. However, in this paper, we attempt to determine the exact time at which the replacement of the given instrument is most economical, The data used in this paper is all about the cost of repairing 250 kva mikano generating plant which was produced by works and services department of The Polytechnic Ibadan, Adeseun Ogundoyin Campus, Eruwa. The replacement model that covers items whose maintenance cost increase with time, ignoring changes in the value of money during the years under study. The result of analysis shows that at 5 th year of using the generating plant in institution under study, the minimum average annual cost of 970,221.60 is obtained. Later, average annual cost increased to 999,726.33. This shows that ,it is economically advice able assuming the authority of The Polytechnic Ibadan has removed the generating plant installed at Eruwa Campus of the institution in the year 2008 and replace it with new one in the 2012 (that is after five years of its usage).