Abstract
A new policy, called stocking policy for ease of reference, is advanced for joint optimization of age replacement and spare provisioning. It combines age replacement policy with continuous review (s,S) type inventory policy, where s is the stock reorder level and S is the maximum stock level. The policy is generally applicable to any operating situation having either a single item or a number of identical items. A simulation model has been developed to determine the optimal values of the decision variables by minimizing the total cost of replacement and inventory. The behavior of the stocking policy is studied for a number of case problems specifically constructed by 5-factor order rotary design and the effects of different cost elements and item failure characteristics are highlighted. For all case problems, optimal (s,S) policies to-support the Barlow-Proschan (1965) age policy are also determined. Simulation results indicate that the optimal policy is, in general, more cost-effective than the Barlow-Proschan policy.