A GENERAL PROCEDURE FOR INCORPORATING ASSET UTILIZATION DECISIONS INTO REPLACEMENT ANALYSIS

ABSTRACT

Replacement analysis has generally been treated as a tactical decision. However, the economic life of an asset is dependent on its utilization, which is an operational decision. Traditional replacement models assume fixed levels of asset utilization to. determine minimum cost replacement schedules, preventing analysis of different utilization/replacement scenarios that may lead to lower overall cost solutions. This problem arises when a multitude of assets may be utilized to achieve a required service level. A model is presented that simultaneously determines tactical (replacement) and operational (utilization) decisions in a general and flexible manner.