In the Inventory Pane, select the file with which to replace other files or display it in the Preview Pane and press the Replaces button.
In the new dialog box, select the submission unit and file to be replaced and press Save.
Use the + button to identify another file to be replaced by the selected file.
Click on 'Skip' in the additional window if the old/previous sequence file is only getting replaced.
The source file:
now shows a value of “Replace” for the Operation and “Current” for the Lifecycle Status when viewing details,
icon changes to
the tree.
The replaced files:
now show a value of “New” for the Operation and “Replaced” for the Lifecycle Status when viewing details,
are visible in all views except Current.
Once a replacement is defined, it will be visible each time the dialog is displayed for that file. Therefore, to remove a replacement, select the source file, press the Replaces button, click 
next to the replacement definition to remove in the dialog, and press Save.
Pseudo-replacement:
Currently, there is a new add-on function in browser-based Publish for the purpose of pseudo-replacement.
In the Replaces dialog box, when the additional window appears after clicking Save,
you may choose to update files from previous submissions that have links to the replaced (original) file.
Review and select the relevant listed files and click on 'Process Selected' button below to begin processing the linked files.
The system will create new links from the replacement document to the related documents, mirroring the original link structure.
Copies of the linked files will be generated with updated links pointing to the new replacement file instead of the original.
Once processing is finished, verify the updated files to confirm that the links now point to the replacement document.
Note:
For larger files, processing may take a minute or two - go to the Status Page to confirm processing is complete, if the files are not seen immediately.
Thus, this add-on to the replace function:
identifies all files that had links to the original document.
gives the option to update those links automatically.
creates new file copies with updated links pointing to the replacement document.