A continuous-time Markov chain model for redundancy allocation problem: An economic analysis

Reliability of an engineering system can be improved by investing on redundant (spare) parts. However, the cost-efficiency of such an investment is a significant concern that needs to be taken into consideration in practice. To do so, a continuous-time Markov chain (CTMC) model is presented in this paper to analyze the system's reliability by allocating redundant components. The developed model can also capture the system's repair and failure conditions by defining appropriate states in CTMC. Subsequently, the net present value (NPV) approach is utilized for a variety of scenarios to investigate the effectiveness of investment on spare parts using the break-even point (BEP) analysis. Afterwards, a comprehensive analysis is carried out to examine the impact of input parameters including interest rate, initial cost of investment, and periodic profit on the decision making process to find the optimal number of spare parts.