Optimum ordering policies with random lead times and salvage cost

This paper deals with the optimum ordering policy for a one unit system with general lifetime, where the failed unit is not repairable. A spare can only be provided after a lead time. Two kinds of orders (regular and emergency) are possible, each having a different lead time. A sensing device is attached to the unit by which the operational status of the unit is monitored continuously. The device is repairable and its lifetime and repair time are assumed to be exponentially distributed, random variables. The costs considered include salvage, penalty, downtime, ordering and repair costs. The optimal policy discussed is the one which maximizes the cost effectiveness. © 1989.