In:
Management Science, Institute for Operations Research and the Management Sciences (INFORMS), Vol. 17, No. 11 ( 1971-07), p. 750-758
Abstract:
This paper will present a model of equipment replacement in a stochastic environment utilizing a number of the component characteristics of an operations research orientation while being designed to emphasize the role of a stochastic representation of technological change and/or maintenance costs and the implications these have for the decision about replacement of equipment. The “replacement” referred to here is replacement of a machine in its entirety rather than the usual periodic-review-replacement-of-individual-pieces analysis to which the term “replacement” frequently refers in operations research literature. The paper outlines the approaches to equipment replacement in the literature of economics and the well-known Terborgh model and then introduces a stochastic model for studying certain aspects of equipment replacement together with the form of its analytic solution. A comparison of the cost implications of the Terborgh and stochastic model is presented for a specific example utilizing motor vehicle data. In addition, a general analytic comparison of the two replacement rules is provided.
Type of Medium:
Online Resource
ISSN:
0025-1909
,
1526-5501
DOI:
10.1287/mnsc.17.11.750
Language:
English
Publisher:
Institute for Operations Research and the Management Sciences (INFORMS)
Publication Date:
1971
detail.hit.zdb_id:
206345-1
detail.hit.zdb_id:
2023019-9
SSG:
3,2
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