Vicentin, D. C.Oprime, P. C.Moralles, H. F.Duppati, G. R.2025-04-282024-11-11Vicentin, D. C., Oprime, P. C., Moralles, H. F., & Duppati, G. R. (2024). Equipment Replacement: A Stochastic Approach Considering Financial and Failure Costs. 15th International Conference on Business and Information – 2024. Faculty of Commerce and Management Studies University of Kelaniya.http://repository.kln.ac.lk/handle/123456789/29036There are various motives to substitute productive equipment, with equipment degradation being one of the main factors. Equipment degradation involves the expenses of malfunctions that become costly over time, resulting in loss to the company. However, there is a scarcity of research that approaches the problem from a stochastic perspective. The incorporation of randomness in decision models signifies a progression in the quality of equipment replacement decisions. Thus, this research aims to analyze the advantages of the stochastic approach compared to the deterministic one, which is widely adopted. The results indicate that it is not advisable to generalize procedures that use a single sample size of failure data as a rule for equipment replacement decisions.Equipment ReplacementFailure CostsFinancial CostsStochastic Financial ModelArticle