Abstract
An approach to determining an acceptable equipment replacement policy is proposed for the case where the operating cost, as a function of age of equipment and purchase date, is fully known. The complete model representing optimum behaviour over an infinite horizon is presented. Because of the computational difficulties involved in the analysis of this model, a sub-optimisation method is suggested, which replaces the infinite stage problem by a single stage problem, modifying the operating cost function to include a “technological opportunity cost”. A comparison of the consequences of this sub-optimisation in relation to the infinite stage model is presented for the purpose of ascertaining when the approximation suggested is valid.
Talk to us
Join us for a 30 min session where you can share your feedback and ask us any queries you have
Schedule a callDisclaimer: All third-party content on this website/platform is and will remain the property of their respective owners and is provided on "as is" basis without any warranties, express or implied. Use of third-party content does not indicate any affiliation, sponsorship with or endorsement by them. Any references to third-party content is to identify the corresponding services and shall be considered fair use under The CopyrightLaw.
