Capital replacement modelling with a fixed planning horizon

Hashem, MH

Abstract

For equipment or plant replacement, when to replace an existing plant, fleet or a
part of it, is one of the main concerns in decision-making. The thesis considers
this decision-making problem using capital replacement models with a fixed
planning horizon, and we took at the behaviour of optimal policy in this context.
Application of the models is considered and we compare replacement models with
a fixed planning horizon with replacement models with a variable planning
horizon models comprising of two cycles. Capital replacement modelling in
general and previous work done in the field are reviewed. The main work of this
thesis is the study of the behaviour of optimal replacement policy for a single
equipment/fleet over a fixed planning horizon, with a numerical investigation of
the behaviour for non-like-with-like replacement. This is extended to describe the
behaviour of optimal policy for replacement of a mixed fleet. A case study is
presented that applies the fixed planning horizon model to a bus fleet; this fleet is
operated by a Malaysian inter-city bus company. Finally we consider the
challenger problem. Throughout, we recommend the use of a fixed planning
horizon model rather than a two cycle variable-horizon model. The rent criterion
is also our favoured criterion for decision-making; the rent criterion exists and is
well behaved for all the models described. A dynamic programming approach is
implemented for the like-with-like replacement problem over a fixed planning
horizon for comparison with the economic life modelling approach of this thesis.
We discuss the use of the different replacement decision models for supporting
replacement decision-making in practical contexts.

Citation

Hashem, M. Capital replacement modelling with a fixed planning horizon. (Thesis). University of Salford

• Thesis Type: Thesis
• Deposit Date: Aug 5, 2011
• Publicly Available Date: Aug 5, 2011
• Award Date: Jan 1, 2001