Estimation of component redundancy in optimal age maintenance

The classical Optimal Age-Replacement defines the maintenance strategy based on the equipment failure consequences. For severe consequences an early equipment replacement is recommended. For minor consequences the repair after failure is proposed. One way of reducing the failure consequences is the use of redundancies, especially if the equipment failure rate is decreasing over time, since in this case the preventive replacement does not reduce the risk of failure. The estimation of an active component redundancy degree is very important in order to minimize the life-cycle cost. If it is possible to make these estimations in the early phase of system design, the implementation is easier and the amortization faster. This work proposes an adaptation of the Optimal Age-Replacement method in order to simultaneously optimize the equipment redundancy allocation and the maintenance plan. The main goal is to provide a simple methodology, requiring the fewer data possible. A set of examples are presented illustrating that this methodology covers a wide variety of operating conditions. The optimization of the number of repairs between each replacement, in the cases of imperfect repairs, is another feature of this methodology

Maintenance optimization of a production system with buffercapacity

Marketing;Optimization;produktieleer/ produktieplanning

ECONOMICS OF BEEF COW CULLING AND REPLACEMENT DECISIONS UNDER GENETIC PROGRESS

Beef cow managers annually face the question of which animals to cull from the herd and replace. The results of this decision affect not only current revenues, but, by altering the genetic composition of the herd, also affect the future profitability of the herd. These genetic changes of the herd may, therefore, be represented as a form of endogenous technological progress to the cow calf producer. This article derives general asset replacement criteria for assets undergoing either exogenous or endogenous progress and illustrates their application with a Florida cow herd example.Livestock Production/Industries,

Inequality and Social Security Reforms

This paper develops a quantitative Markovian overlapping generations model with altruistic individuals and incomplete financial markets in order to analyze the long-run distributional implications of two hypothetical public social security policy changes, made in response to impending future demographic shifts. The two policy changes considered are first, raising the tax rate while keeping the replacement rate constant and second, keeping the tax rate constant while lowering the replacement rate. Whereas this latter policy is detrimental to the relative situation of the retirees, the huge financial heterogeneity in the first scenario explains why the increase in the proportional labor tax is relatively badly absorbed by low-productivity workers, leading to an increase in welfare inequality. We show that the very popular idea that a more funded system would ineluctably lead to more inequalities in well-being can be justified only by focusing on the inequality of positions in case of general equilibrium.Inequality, social security reform, idiosyncratic uncer-tainty, incomplete markets, altruism

Curing the Dutch Disease: Lessons for United States Disability Policy

In the 1990s, the United States reformed welfare programs targeted on single mothers and dramatically reduced their benefit receipt while increasing their employment and economic wellbeing. Despite increasing calls to do the same for working age people with disabilities in the U.S., disability cash transfer program rolls continue to grow as their employment rates fall and their economic well-being stagnates. In contrast to the failure to reform United States disability policy, the Netherlands, once considered to have the most out of control disability program among OECD nations, initiated reforms in 2002 that have dramatically reduced their disability cash transfer rolls, while maintaining a strong but less generous social minimum safety net for all those who do not work. Here we review disability program growth in the United States and the Netherlands, link it to changes in their disability policies and show that while difficult to achieve, fundamental disability reform is possible. We argue that shifts in SSI policies that focus on better integrating working age men and women with disabilities into the work force along the lines of those implemented for single mothers in the 1990s, together with SSDI program changes that better integrate private and public disability insurance programs along the lines of the reforms in the Netherlands, offer the best hope of improving their employment rates and economic well-being as well as reducing SSDI/SSI program growth.

Time inconsistent preferences and Social Security

In this paper we examine the role of social security in an economy populated by overlapping generations of individuals with time-inconsistent preferences who face mortality risk, individual income risk, and borrowing constraints. Agents in this economy are heterogeneous with respect to age, employment status, retirement status, hours worked, and asset holdings. We consider two cases of time-inconsistent preferences. First, we model agents as quasi-hyperbolic discounters. They can be sophisticated and play a symmetric Nash game against their future selves; or they can be naive and believe that their future selves will exponentially discount. Second, we consider retrospective time inconsistency. We find that (1) there are substantial welfare costs to quasi-hyperbolic discounters of their time-inconsistent behavior, (2) social security is a poor substitute for a perfect commitment technology in maintaining old-age consumption, (3) there is little scope for social security in a world of quasi-hyperbolic discounters (with a short-term discount rate up to 15%), and, (4) the ex ante annual discount rate must be at least 10% greater than seems warranted ex post in order for a majority of individuals with retrospective time inconsistency to prefer a social security tax rate of 10% to no social security. Our findings question the effectiveness of unfunded social security in correcting for the undersaving resulting from time-inconsistent preferences.Social security

Evaluating election platforms: a task for fiscal councils? Scope and rules of the game in view of 25 years of Dutch practice

In some countries - the Netherlands, UK and USA - the expected economic implications of election platforms of political parties are evaluated by independent economic institutions prior to the election. This paper analyzes the merits and limitations of this process, taking 25 years of Dutch experience as a point of reference. In particular in times of financial crisis and unsustainable public finance, evaluation of election platforms can serve as a disciplining device for unrealistic or (time) inconsistent promises by politicians. More in general, it can help political parties to credibly inform voters about the implications of their platforms, to design more efficient policies and to reach consensus on them. It can also create a level playing field for political parties not represented in the government, in particular those with limited resources for economic information and expertise. However, there may be adverse effects, in particular when trade-offs are presented in an unbalanced way or when the rules of the evaluation provide too much room for gaming and free lunches.Evaluation of election platforms, Fiscal watchdogs

Disability risk, disability insurance and life cycle behavior

The Disability Insurance (DI) program in the US is a large social insurance program that offers income replacement benefits to people with work limiting disabilities. The proportion of DI claimants in the US is now almost 5% of the working-age population and the cost is three times that of unemployment insurance. The key questions in thinking about the size and growth of the DI program are whether program claimants are genuinely unable to work, and how valuable is the insurance provided. This paper has three aims: We provide a framework for weighing up the insurance value of disability benefi…ts against the incentive cost of inducing healthy individuals to stop work at different points of their life-cycle. We estimate the risks to health that may lead to work-limiting disabilities and the risk to wages that may lead to individuals choosing not to work. We also estimate the extent of false awards made through the DI program alongside the proportion of awards to those in genuine need. We use our model and estimates to characterize the economic effects of the disability insurance and to consider how policy reforms would affect behaviour and standard measures of household welfare. We differentiate disability status by its severity, and show that a severe disability shock leads to a decline in wages of 40%, as well as a substantial rise in the fixed cost of going to work. In terms of the effectiveness of the DI program, we estimate high levels of rejections of genuine applicants. In our counterfactual simulations, this means that household welfare increases as the program becomes less strict, despite the worsening incentives for false applications that this implies. On the other hand, incentives for false applications are reduced by reducing generosity and increasing reassessments, and these policies increase household welfare, despite the worse insurance implied.Disability, social security, savings behavior, wage risk