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Algorithms for asset replacement under limited technological forecast

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  • Yatsenko, Yuri
  • Hritonenko, Natali

Abstract

The optimal asset replacement is analyzed when the future course of technological change is known on a limited future horizon. Comparison of factual and desired properties of known replacement methods leads us to the idea of how to improve their efficiency under changing technology reflected in decreasing operating and new asset costs. We introduce new modifications of the economic life and two-cycle variable-horizon methods by correcting their capital recovery factor. Next, we demonstrate that the modified methods deliver solutions equal or close to the infinite-horizon replacement under technological change.

Suggested Citation

  • Yatsenko, Yuri & Hritonenko, Natali, 2015. "Algorithms for asset replacement under limited technological forecast," International Journal of Production Economics, Elsevier, vol. 160(C), pages 26-33.
    • Handle: RePEc:eee:proeco:v:160:y:2015:i:c:p:26-33
    DOI: 10.1016/j.ijpe.2014.08.020
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    References listed on IDEAS

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    1. Yatsenko, Yuri & Hritonenko, Natali, 2008. "Properties of optimal service life under technological change," International Journal of Production Economics, Elsevier, vol. 114(1), pages 230-238, July.
    2. Yatsenko, Yuri & Hritonenko, Natali, 2011. "Economic life replacement under improving technology," International Journal of Production Economics, Elsevier, vol. 133(2), pages 596-602, October.
    3. Farid Mardin & Takeshi Arai, 2012. "Capital Equipment Replacement Under Technological Change," The Engineering Economist, Taylor & Francis Journals, vol. 57(2), pages 119-129.
    4. Sophie Mercier, 2008. "Optimal replacement policy for obsolete components with general failure rates," Applied Stochastic Models in Business and Industry, John Wiley & Sons, vol. 24(3), pages 221-235, May.
    5. Joseph C. Hartman & Chin Hon Tan, 2014. "Equipment Replacement Analysis: A Literature Review and Directions for Future Research," The Engineering Economist, Taylor & Francis Journals, vol. 59(2), pages 136-153, April.
    6. Suresh Sethi & Suresh Chand, 1979. "Planning Horizon Procedures for Machine Replacement Models," Management Science, INFORMS, vol. 25(2), pages 140-151, February.
    7. Nguyen, T.P. Khanh & Yeung, Thomas G. & Castanier, Bruno, 2013. "Optimal maintenance and replacement decisions under technological change with consideration of spare parts inventories," International Journal of Production Economics, Elsevier, vol. 143(2), pages 472-477.
    8. Richardson, Steven & Kefford, Adrian & Hodkiewicz, Melinda, 2013. "Optimised asset replacement strategy in the presence of lead time uncertainty," International Journal of Production Economics, Elsevier, vol. 141(2), pages 659-667.
    9. P Scarf & R Dwight & A McCusker & A Chan, 2007. "Asset replacement for an urban railway using a modified two-cycle replacement model," Journal of the Operational Research Society, Palgrave Macmillan;The OR Society, vol. 58(9), pages 1123-1137, September.
    10. Goetz, Renan-Ulrich & Hritonenko, Natali & Yatsenko, Yuri, 2008. "The optimal economic lifetime of vintage capital in the presence of operating costs, technological progress, and learning," Journal of Economic Dynamics and Control, Elsevier, vol. 32(9), pages 3032-3053, September.
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    Cited by:

    1. Alp, Osman & Tan, Tarkan & Udenio, Maximiliano, 2022. "Transitioning to sustainable freight transportation by integrating fleet replacement and charging infrastructure decisions," Omega, Elsevier, vol. 109(C).
    2. Yatsenko, Yuri & Hritonenko, Natali, 2017. "Machine replacement under evolving deterministic and stochastic costs," International Journal of Production Economics, Elsevier, vol. 193(C), pages 491-501.
    3. Yatsenko, Yuri & Hritonenko, Natali, 2020. "Optimal asset replacement: Profit maximization under varying technology," International Journal of Production Economics, Elsevier, vol. 228(C).
    4. Yuri Yatsenko & Natali Hritonenko, 2016. "Asset replacement under improving operating and capital costs: a practical approach," International Journal of Production Research, Taylor & Francis Journals, vol. 54(10), pages 2922-2933, May.
    5. Khanh T.P. Nguyen & Thomas Yeung & Bruno Castanier, 2017. "Acquisition of new technology information for maintenance and replacement policies," International Journal of Production Research, Taylor & Francis Journals, vol. 55(8), pages 2212-2231, April.
    6. Stutzman, Sarah & Weiland, Brandon & Preckel, Paul & Wetzstein, Michael, 2017. "Optimal replacement policies for an uncertain rejuvenated asset," International Journal of Production Economics, Elsevier, vol. 185(C), pages 21-33.

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