A replacement interval indicates how long equipment remains in service before it is retired and new equipment substituted. The optimum replacement interval is the service time associated with the smallest cost per unit. If a part wears out and the cost of an unplanned failure is greater than the cost of the planned replacement, an optimal replacement interval exits. Replacing the part any sooner than this interval results in replacement costs that are too high. Replacing the part later than this interval increases the odds of a breakdown, which generates failures costs that are too high. The optimal interval is the age with the minimum ratio of the mean cost to the mean time to failure.