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The Replacement-Renewal Of Industrial Equipments. The Mapi Formulas

Author

Listed:
  • Mella Piero
  • Pellicelli Michela
  • Meo Colombo Carlotta

Abstract

Since the production has been found to be an economical means for satisfying human wants, this process requires a complex industrial organization together with a large investment in equipments, plants and productive systems. These productive systems are employed to alter the physical environment and create consumer goods. As a result, they are consumed or become obsolete, inadequate, or otherwise candidates for replacement. When replacement is being considered, two assets must be evaluated: the present asset, the defender and its potential replacement, the challenger. Since the success of an industrial organization depends upon profit, replacement should generally occur if an economic advantage will result. Whatever the reason leading to the consideration of replacement, the analysis and decisions must be based upon estimates of what will occur in the future. In this paper we present the Mapi algorithm as a procedure for evaluating investments or for analyzing replacement opportunities.

Suggested Citation

  • Mella Piero & Pellicelli Michela & Meo Colombo Carlotta, 2010. "The Replacement-Renewal Of Industrial Equipments. The Mapi Formulas," Annals of Faculty of Economics, University of Oradea, Faculty of Economics, vol. 1(1), pages 667-680, July.
    • Handle: RePEc:ora:journl:v:1:y:2010:i:1:p:667-680
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    File URL: http://anale.steconomiceuoradea.ro/volume/2010/n1/105.pdf
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    References listed on IDEAS

    as
    1. Joel Dean & Winfield Smith, 1955. "Has MAPI a Place in a Comprehensive System of Capital Controls?," The Journal of Business, University of Chicago Press, vol. 28, pages 261-261.
    2. George Terborgh, 1956. "Some Comments on the Dean-Smith Article on the Mapi Formula," The Journal of Business, University of Chicago Press, vol. 29, pages 138-138.
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      More about this item

      Keywords

      replacement/renewal policy; Mapi formulas; adverse minimum; defender and challenger plant; operating inferiority; one-more year test;
      All these keywords.

      JEL classification:

      • M10 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Business Administration - - - General
      • M11 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Business Administration - - - Production Management
      • M20 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Business Economics - - - General
      • M21 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Business Economics - - - Business Economics

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