IDEAS home Printed from https://ideas.repec.org/a/wly/navres/v38y1991i2p203-220.html
   My bibliography  Save this article

Timing replacement decisions under discontinuous technological change

Author

Listed:
  • Wallace J. Hopp
  • Suresh K. Nair

Abstract

We consider the problem of deciding whether to keep a piece of equipment or replace it with a more advanced technology in an environment of technological change. Our model assumes that the costs associated with the presently available technology and future technologies are known, but that the appearance times of future technologies are uncertain. We develop a procedure for computing the optimal keep‐or‐replace decision that iteratively incorporates a technological forecast. For a certain class of situations, we show that our approach requires the minimum possible amount of forecasted data.

Suggested Citation

  • Wallace J. Hopp & Suresh K. Nair, 1991. "Timing replacement decisions under discontinuous technological change," Naval Research Logistics (NRL), John Wiley & Sons, vol. 38(2), pages 203-220, April.
    • Handle: RePEc:wly:navres:v:38:y:1991:i:2:p:203-220
    DOI: 10.1002/1520-6750(199104)38:23.0.CO;2-E
    as

    Download full text from publisher

    File URL: https://doi.org/10.1002/1520-6750(199104)38:23.0.CO;2-E
    Download Restriction: no
    File URL: https://libkey.io/10.1002/1520-6750(199104)38:23.0.CO;2-E?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
    ---><---

    References listed on IDEAS

    as
    1. Wallace J. Hopp, 1989. "Technical Note—Identifying Forecast Horizons in Nonhomogeneous Markov Decision Processes," Operations Research, INFORMS, vol. 37(2), pages 339-343, April.
    2. James C. Bean & Robert L. Smith, 1984. "Conditions for the Existence of Planning Horizons," Mathematics of Operations Research, INFORMS, vol. 9(3), pages 391-401, August.
    3. William P. Pierskalla & John A. Voelker, 1976. "A survey of maintenance models: The control and surveillance of deteriorating systems," Naval Research Logistics Quarterly, John Wiley & Sons, vol. 23(3), pages 353-388, September.
    4. S. P. Sethi & T. E. Morton, 1972. "A mixed optimization technique for the generalized machine replacement problem," Naval Research Logistics Quarterly, John Wiley & Sons, vol. 19(3), pages 471-481, September.
    5. Suresh Chand & Suresh Sethi, 1982. "Planning horizon procedures for machine replacement models with several possible replacement alternatives," Naval Research Logistics Quarterly, John Wiley & Sons, vol. 29(3), pages 483-493, September.
    6. Tzvi Goldstein & Shaul P. Ladany & Abraham Mehrez, 1988. "A discounted machine‐replacement model with an expected future technological breakthrough," Naval Research Logistics (NRL), John Wiley & Sons, vol. 35(2), pages 209-220, April.
    7. Y. S. Sherif & M. L. Smith, 1981. "Optimal maintenance models for systems subject to failure–A Review," Naval Research Logistics Quarterly, John Wiley & Sons, vol. 28(1), pages 47-74, March.
    8. Suresh Sethi & Suresh Chand, 1979. "Planning Horizon Procedures for Machine Replacement Models," Management Science, INFORMS, vol. 25(2), pages 140-151, February.
    9. C. Bes & S. P. Sethi, 1988. "Concepts of Forecast and Decision Horizons: Applications to Dynamic Stochastic Optimization Problems," Mathematics of Operations Research, INFORMS, vol. 13(2), pages 295-310, May.
    Full references (including those not matched with items on IDEAS)

    Citations

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


    Cited by:

    1. Natali Hritonenko & Yuri Yatsenko, 2012. "Fleet replacement under technological shocks," Annals of Operations Research, Springer, vol. 196(1), pages 311-331, July.
    2. A. Bensoussan & Q. Feng & S. P. Sethi, 2022. "Integrating equipment investment strategy with maintenance operations under uncertain failures," Annals of Operations Research, Springer, vol. 317(2), pages 353-386, October.
    3. Israel David & Eitan Greenshtein & Avraham Mehrez, 1997. "A dynamic‐programming approach to continuous‐review obsolescent inventory problems," Naval Research Logistics (NRL), John Wiley & Sons, vol. 44(8), pages 757-774, December.
    4. Joseph C. Hartman, 2000. "The parallel replacement problem with demand and capital budgeting constraints," Naval Research Logistics (NRL), John Wiley & Sons, vol. 47(1), pages 40-56, February.
    5. Ali Dogramaci & Nelson M. Fraiman, 2004. "Replacement Decisions with Maintenance Under Uncertainty: An Imbedded Optimal Control Model," Operations Research, INFORMS, vol. 52(5), pages 785-794, October.
    6. Miles Gietzmann & Adam Ostaszewski, 2004. "Predicting firm value: the superiority of -theory over residual income," Accounting and Business Research, Taylor & Francis Journals, vol. 34(4), pages 349-377.
    7. Awi Federgruen & Michal Tzur, 1996. "Detection of minimal forecast horizons in dynamic programs with multiple indicators of the future," Naval Research Logistics (NRL), John Wiley & Sons, vol. 43(2), pages 169-189, March.
    8. Zhi‐Long Chen, 1998. "Solution algorithms for the parallel replacement problem under economy of scale," Naval Research Logistics (NRL), John Wiley & Sons, vol. 45(3), pages 279-295, April.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. S. Bylka & S. Sethi & G. Sorger, 1992. "Minimal forecast horizons in equipment replacement models with multiple technologies and general switching costs," Naval Research Logistics (NRL), John Wiley & Sons, vol. 39(4), pages 487-507, June.
    2. Awi Federgruen & Michal Tzur, 1996. "Detection of minimal forecast horizons in dynamic programs with multiple indicators of the future," Naval Research Logistics (NRL), John Wiley & Sons, vol. 43(2), pages 169-189, March.
    3. Philip C. Jones & James L. Zydiak & Wallace J. Hopp, 1991. "Parallel machine replacement," Naval Research Logistics (NRL), John Wiley & Sons, vol. 38(3), pages 351-365, June.
    4. Suresh Chand & Vernon Ning Hsu & Suresh Sethi, 2002. "Forecast, Solution, and Rolling Horizons in Operations Management Problems: A Classified Bibliography," Manufacturing & Service Operations Management, INFORMS, vol. 4(1), pages 25-43, September.
    5. Torpong Cheevaprawatdomrong & Irwin E. Schochetman & Robert L. Smith & Alfredo Garcia, 2007. "Solution and Forecast Horizons for Infinite-Horizon Nonhomogeneous Markov Decision Processes," Mathematics of Operations Research, INFORMS, vol. 32(1), pages 51-72, February.
    6. A. Bensoussan & Q. Feng & S. P. Sethi, 2022. "Integrating equipment investment strategy with maintenance operations under uncertain failures," Annals of Operations Research, Springer, vol. 317(2), pages 353-386, October.
    7. Archis Ghate & Robert L. Smith, 2013. "A Linear Programming Approach to Nonstationary Infinite-Horizon Markov Decision Processes," Operations Research, INFORMS, vol. 61(2), pages 413-425, April.
    8. Ali Dogramaci & Nelson M. Fraiman, 2004. "Replacement Decisions with Maintenance Under Uncertainty: An Imbedded Optimal Control Model," Operations Research, INFORMS, vol. 52(5), pages 785-794, October.
    9. Rommert Dekker & Eric Smeitink, 1994. "Preventive maintenance at opportunities of restricted duration," Naval Research Logistics (NRL), John Wiley & Sons, vol. 41(3), pages 335-353, April.
    10. Sampath Rajagopalan & Medini R. Singh & Thomas E. Morton, 1998. "Capacity Expansion and Replacement in Growing Markets with Uncertain Technological Breakthroughs," Management Science, INFORMS, vol. 44(1), pages 12-30, January.
    11. Dmitry BANNIKOV & Nina SIRINA & Alexander SMOLYANINOV, 2018. "Model Of The Maintenance And Repair System In Service Maintenance Management," Transport Problems, Silesian University of Technology, Faculty of Transport, vol. 13(3), pages 5-14, September.
    12. James Flynn & Chia‐Shin Chung, 2002. "A branch and bound algorithm for computing optimal replacement policies in consecutive k‐out‐of‐n‐systems," Naval Research Logistics (NRL), John Wiley & Sons, vol. 49(3), pages 288-302, April.
    13. Wang, Wei & Wu, Zhiying & Xiong, Junlin & Xu, Yaofeng, 2018. "Redundancy optimization of cold-standby systems under periodic inspection and maintenance," Reliability Engineering and System Safety, Elsevier, vol. 180(C), pages 394-402.
    14. James C. Bean & Jack R. Lohmann & Robert L. Smith, 1994. "Equipment replacement under technological change," Naval Research Logistics (NRL), John Wiley & Sons, vol. 41(1), pages 117-128, February.
    15. Wallace J. Hopp & Yar‐Lin Kuo, 1998. "Heuristics for multicomponent joint replacement: Applications to aircraft engine maintenance," Naval Research Logistics (NRL), John Wiley & Sons, vol. 45(5), pages 435-458, August.
    16. Lisa M. Maillart & Xiang Fang, 2006. "Optimal maintenance policies for serial, multi‐machine systems with non‐instantaneous repairs," Naval Research Logistics (NRL), John Wiley & Sons, vol. 53(8), pages 804-813, December.
    17. Robert L. Smith & Rachel Q. Zhang, 1998. "Infinite Horizon Production Planning in Time-Varying Systems with Convex Production and Inventory Costs," Management Science, INFORMS, vol. 44(9), pages 1313-1320, September.
    18. Alireza Sabouri & Woonghee Tim Huh & Steven M. Shechter, 2017. "Screening Strategies for Patients on the Kidney Transplant Waiting List," Operations Research, INFORMS, vol. 65(5), pages 1131-1146, October.
    19. Milind Dawande & Srinagesh Gavirneni & Sanjeewa Naranpanawe & Suresh Sethi, 2007. "Forecast Horizons for a Class of Dynamic Lot-Size Problems Under Discrete Future Demand," Operations Research, INFORMS, vol. 55(4), pages 688-702, August.
    20. Yeek-Hyun Kim & Lyn Thomas, 2013. "Training and repair policies for stand-by systems," Annals of Operations Research, Springer, vol. 208(1), pages 469-487, 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:wly:navres:v:38:y:1991:i:2:p:203-220. 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.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with 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: Wiley Content Delivery (email available below). General contact details of provider: https://doi.org/10.1002/(ISSN)1520-6750 .

    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.