Group replacement model is applicable to the itemsthat fail completely on usage and the result is groupreplacement age for the entire group of items in the systemirrespective of whether they are functioning or not. GenerallyIndustrial items /equipment get worn with time and usage and itfunctions with decreasing efficiency. The increasing repair andmaintenance cost demands the replacement of items. In thecurrent model an intermediate state called repairablebreakdown state in between functioning and irreparablebreakdown state is considered and the Hidden Markov Model(HMM) is made use of in generating the probabilities of itemsfalling in different states. Replacement decision is madeconsidering money value. The optimal replacement age is thetime bucket ‘t’ at which the average cost of the individualreplacement, repair and the cost of the group of items isminimum
