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Length of Operational Life and Its Impact on Life-Cycle Costs of a Tractor in Switzerland

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  • Markus Lips

    (Agroscope, Tänikon, CH-8356 Ettenhausen, Switzerland)

Abstract

Assuming full exhaustion of their estimated service life—also referred to as estimated technical working life—the low annual utilisation of agricultural machines in Switzerland leads to a long operational life. To determine the costs of an additional year’s service, we calculate the life-cycle costs (LCCs), which encompass all costs for an 82 kW four-wheel-drive tractor over its entire operational life. Assuming full utilisation of the estimated service life of 10,000 h, five operating versions are compared, each with an operational life of between 10 and 30 years and matched annual utilisations between 1000 h and 333 h. A key finding is that an additional year in service increases LCCs by 4.5% of the tractor’s purchase price. In addition, we carry out a sensitivity analysis by applying discount rates of between 0% and 4%, finding that a comparatively high discount rate of 3% leads to almost identical LCCs for all operating versions. We conclude that the annual utilisation and the resulting duration of operational life have a strong impact on LCCs. A short operational life associated with high annual utilisation is a promising strategy for substantially cutting machinery costs.

Suggested Citation

  • Markus Lips, 2017. "Length of Operational Life and Its Impact on Life-Cycle Costs of a Tractor in Switzerland," Agriculture, MDPI, vol. 7(8), pages 1-9, August.
    • Handle: RePEc:gam:jagris:v:7:y:2017:i:8:p:68-:d:107361
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    References listed on IDEAS

    as
    1. Saccani, Nicola & Perona, Marco & Bacchetti, Andrea, 2017. "The total cost of ownership of durable consumer goods: A conceptual model and an empirical application," International Journal of Production Economics, Elsevier, vol. 183(PA), pages 1-13.
    2. Lips, Markus & Burose, Frank, 2012. "Repair and Maintenance Costs for Agricultural Machines," International Journal of Agricultural Management, Institute of Agricultural Management, vol. 1(3), pages 1-7.
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    Cited by:

    1. Antonina Kalinichenko & Valerii Havrysh & Igor Atamanyuk, 2019. "The Acceptable Alternative Vehicle Fuel Price," Energies, MDPI, vol. 12(20), pages 1-20, October.
    2. Mauro Lizot & Flavio Trojan & Paulo Afonso, 2021. "Combining Total Cost of Ownership and Multi-Criteria Decision Analysis to Improve Cost Management in Family Farming," Agriculture, MDPI, vol. 11(2), pages 1-20, February.
    3. Gulati, Ashok & Juneja, Ritika, 2020. "Farm Mechanization in Indian Agriculture with Focus on Tractors," Discussion Papers 305188, University of Bonn, Center for Development Research (ZEF).
    4. Yu Wang & Ling Wang & Jianhua Zong & Dongxiao Lv & Shumao Wang, 2021. "Research on Loading Method of Tractor PTO Based on Dynamic Load Spectrum," Agriculture, MDPI, vol. 11(10), pages 1-14, October.
    5. Roggenburg, Michael & Esquivel-Puentes, Helber A. & Vacca, Andrea & Bocanegra Evans, Humberto & Garcia-Bravo, Jose M. & Warsinger, David M. & Ivantysynova, Monika & Castillo, Luciano, 2020. "Techno-economic analysis of a hydraulic transmission for floating offshore wind turbines," Renewable Energy, Elsevier, vol. 153(C), pages 1194-1204.

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