IDEAS home Printed from https://ideas.repec.org/a/taf/uiiexx/v42y2010i5p342-353.html
   My bibliography  Save this article

Equipment replacement analysis with an uncertain finite horizon

Author

Listed:
  • Chin Tan
  • Joseph Hartman

Abstract

Equipment replacement strategies are highly dependent on the horizon of analysis. While the literature can generally be categorized according to infinite or finite-horizon solutions, this paper examines the case where the horizon will last at least Ts periods but may last as long as Tl periods, due to uncertainty in the length of production runs or the temporary provision of services. Stochastic dynamic programming formulations are presented and solutions that minimize either expected costs or maximum regret are explored. Furthermore, the critical time period where optimal decisions diverge for different horizon realizations is identified. As this time period may be substantially earlier than Ts, a lease option contract is designed that allows owners to lower the risk of high costs that may result from a given horizon realization, while opening a possible source of revenue for a leasor.

Suggested Citation

  • Chin Tan & Joseph Hartman, 2010. "Equipment replacement analysis with an uncertain finite horizon," IISE Transactions, Taylor & Francis Journals, vol. 42(5), pages 342-353.
    • Handle: RePEc:taf:uiiexx:v:42:y:2010:i:5:p:342-353
    DOI: 10.1080/07408170903394363
    as

    Download full text from publisher

    File URL: http://hdl.handle.net/10.1080/07408170903394363
    Download Restriction: Access to full text is restricted to subscribers.
    File URL: https://libkey.io/10.1080/07408170903394363?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Adkins, Roger & Paxson, Dean, 2013. "Deterministic models for premature and postponed replacement," Omega, Elsevier, vol. 41(6), pages 1008-1019.
    2. Akshay Mutha & Saurabh Bansal & V. Daniel R. Guide, 2021. "Managing the Inter‐Functional Tension between Accounting‐ and Financial‐Profits in Remanufacturing Multiple‐Usecycle Products," Production and Operations Management, Production and Operations Management Society, vol. 30(9), pages 2993-3014, September.

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:taf:uiiexx:v:42:y:2010:i:5:p:342-353. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Chris Longhurst (email available below). General contact details of provider: http://www.tandfonline.com/uiie .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.