IET303 Operations Research

Dynamic Programming Procedure

for
Reliability Problem &
Equipment Replacement Problem

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 DP Solution for Reliability Problem
The reliability of a system is the product of the
reliability (Ri) of its components. If Ri ui is the
reliability of component having ui units in parallel (ui
to indicate number of components only), then the
reliability of the system comprising of n components
in series is
Then, the problem is maximize R =
subject to

Where Ci ui, is-the cost of components, when it has ui

units in parallel and C is the total capital available.
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 DP Solution for Reliability Problem
The problem can be solved by considering the
components as stages and the capital allocated as state
of the system xi. The state xi (0 ≤ xi ≤ C) is the capital
allocated to stages i inclusive.
The reliability of the components of the return function at
stage i may be expressed as fi (xi).
The recursive equations can be written as
fi ui = max {Ri ui x fi-1 (xi – Ciui)} 0 ≤ Ci ui ≤ xi
Since the return functions of different components are
multiplied by each other, the procedure is called
multiplicative decomposition.
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 DP Solution for Reliability Problem - Ex
An electronic device consists of four components, each of
which must function for the system. The system reliability
can be improved by installing parallel units in one more of
the components. The reliability (R) of a component with
one, two or three parallel units and the corresponding
cost (C) are given in table below. The maximum amount
available for this device is 100. Determine the number of
parallel units in each component to optimize the
reliability.

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DP Solution for Reliability Problem - Ex

Components
Number
of Units 1 2 3 4

R C R C R C R C

1 0.7 10 0.5 20 0.7 10 0.6 20

2 0.8 20 0.7 40 0.9 30 0.7 30

3 0.9 30 0.8 50 0.95 40 0.9 40

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 DP Solution for Reliability Problem – Soln.
In this problem, component can be taken as u1, u2, u3
and u4 connected serially.
For DP solution, each of the component can be
considered as stages as follows:
Stage 1 = component u1
Stage 2 = component u2
Stage 3 = component u3
Stage 4 = component u4

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 DP Solution for Reliability Problem – Soln.
In this problem, device will consist of at least one unit in each
component (C11, C21, C31 & C41). Then the capital (fund)
allocation (xi) for these components / stages can be as follows.

Stage 01 10 ≤ x1 ≤ 50
Stage 02 30 ≤ x2 ≤ 70
Stage 03 40 ≤ x3 ≤ 80
Stage 04 60 ≤ x4 ≤ 100

The computations for all four stages are given below in the
tabular form. For each stage find maximum reliability options
within the capital allocation and find optimum.
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DP Solution for Reliability Problem – Soln.
Stage 1 (component u1)

Optimal
Solution

R = 0.7, C = 10 R = 0.8, C = 20 R = 0.9, C= 30

10 0.7 - - 0.7 1
20 0.7 0.8 - 0.8 2
30 0.7 0.8 0.9 0.9 3
40 0.7 0.8 0.9 0.9 3
50 0.7 0.8 0.9 0.9 3
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DP Solution for Reliability Problem – Soln.
Stage 2 (component u2)

Optimal
Solution

R = 0.5, C= 20 R = 0.7, C= 40 R = 0.8, C= 50

30 0.5 x 0.7 - - 0.35 1

40 0.5 x 0.8 - - 0.40 1
50 0.5 x 0.9 0.7 x 0.7 - 0.49 2
60 0.5 x 0.9 0.7 x 0.8 0.8 x 0.7 0.56 2,3
70 0.5 x 0.9 0.7 x 0.9 0.8 x 0.8 0.64 3

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DP Solution for Reliability Problem – Soln.
Stage 3 (component u3)

Optimal
Solution

R = 0.7, C= 10 R = 0.9, C= 30 R = 0.95, C= 40

40 0.7 x 0.35 = 0.245 - - 0.245 1

50 0.7 x 0.40 = 0.280 - - 0.280 1

60 0.7 x 0.49 = 0.343 0.9 x 0.35 = 0.315 - 0.343 1

70 0.7 x 0.56 = 0.392 0.9 x 0.40 = 0.360 0.95 x 0.35 = 0.3325 0.392 1

80 0.7 x 0.64 = 0.448 0.9 x 0.49 = 0.441 0.95 x 0.40 = 0.380 0.448 1

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 DP Solution for Reliability Problem – Soln.
Stage 4 (component u4)

Optimal
Solution

R = 0.6, C= 20 R = 0.7, C= 30 R = 0.9, C= 40

60 0.6 x 0.245 = 0.147 - - 0.147 1

70 0.6 x 0.280 = 0.168 0.7 x 0.245 = 0.1715 - 0.1715 2

80 0.6 x 0.343 = 0.2058 0.7 x 0.280 = 0.196 0.9 x 0.245 = 0.2205 0.2205 3

90 0.6 x 0.392 = 0.2352 0.7 x 0.343 = 0.2401 0.9 x 0.280 = 0.252 0.252 1

100 0.6 x 0.448 = 0.2688 0.7 x 0.392 = 0.2744 0.9 x 0.343 = 0.3087 0.3087 3
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DP Solution for Reliability Problem – Soln.
The optimal value of f4 (x4) = 0.3087
with u4 = 3 and x4 = 100

Thus the optimal solution (unit with no. of parallel

components) is

3 units in parallel on component 4

1 unit on component 3

2 units in parallel on component 2

1 unit on component 1
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 Equipment Replacement Problem
Let r(t), c(t) and s(t) represent the yearly revenue,
operating cost, and salvage value of a t-year-old machine.
The cost of acquiring a new machine in any year is 1 lakh.
The elements of the dynamic programming model are:
1. Stage i is represented by year i, i = 1,2, ... , n.
2. The alternatives at stage (year) i are
either keeping or replacing the machine at the start of
year i.
3. The state at stage i is the age of the machine at the
start of year i.

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Equipment Replacement Problem

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 Equipment Replacement Problem – Ex - 01
A company needs to determine the optimal replacement
policy for a current 3-year-old machine over the next 4
years (n = 4). The company requires that a 6-year-old
machine must be replaced. The cost of a new machine is
$1,00,000. The following table gives the data of the
problem.

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 Equipment Replacement Problem – Soln.
 The problem is summarized as a network figure
shown below.
 At the start of year 1, we have a 3-year-old machine.
We can either replace it (R) or keep it (K) for another
year.
 At the start of year 2, if replacement occurred at year
1, the new machine will be 1 year old; otherwise, the
old machine will be 4 years old.
 Same logic applies at the start of years 2 to 4. If a 1 -
year-old machine is replaced at the start of year 2,3,
or 4, its replacement will be 1 year old at the start of
the following year.
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 Equipment Replacement Problem
Also, at the start of year 4, a 6-year-old machine must be
replaced, and at the end of year 4 (end of the planning horizon),
we salvage (5) the machines. The network diagram is shown
below.

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 Equipment Replacement Problem
 The network shows that at the start of year 2, the
possible ages of the machine are 1 and 4 years.
For the start of year 3, the possible ages are 1,2,
and 5 years, and for the start of year 4, the
possible ages are 1,2,3, and 6 years.
 The solution of the network in figure is
equivalent to finding the longest route (i.e.,
maximum revenue) from the start of year 1 to the
end of year 4. We will use the tabular form to
solve the problem.
 Equipment Replacement Problem

 All values are in thousands of dollars. Note

that if a machine is replaced in year 4 (i.e.,
end of the planning horizon), its revenue will
include the salvage value, s(t), of
the replaced machine and the salvage
value, s(1), of the replacement machine.

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Equipment Replacement Problem

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Equipment Replacement Problem

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Equipment Replacement Problem

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Equipment Replacement Problem

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Equipment Replacement Problem

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 Equipment Replacement Problem
 The figures summarizes the optimal solution. At the
start of year 1, given t = 3, the optimal decision is to
replace the machine.
 Thus, the new machine will be 1 year old at the
start of year 2, and l = 1 at the start of year 2 calls
for either keeping or replacing the machine.
 If it is replaced, the new machine will be 1 year old
at the start of year 3; otherwise, the kept machine
will be 2 years old. The process is continued in this
manner until year 4 is reached
 The alternative optimal policies starting in year 1
are (R, K, K, R) and (R, R, K, K). The total cost is
$55,300. 25
end