In this paper we discuss a general framework for single component replacement models. This framework is based on the regenerative structure of these models and by using results from renewal theory a unified presentation of the discounted and average finite and infinite horizon cost models is given. Moreover, we present sufficient conditions for the numerator of the cost function to have a vanishing singular part. Finally, some well-known replacement models are discussed, and making use of the previous results an easy derivation of their cost functions is presented.

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Econometric Institute Research Papers
Erasmus School of Economics

Frenk, J.B.G, Dekker, R, & Kleijn, M.J. (1996). A unified treatment of single component replacement models (No. EI 9602-/A). Econometric Institute Research Papers. Retrieved from