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A Model for Equipment Replacement Decisions and Policies
Abstract
A computer program using a dynamic programming algorithm to optimize the projected discounted cash flow is used by fleet managers at Phillips Petroleum Company in making replacement decisions for individual highway tractors. Now it is also being used to formulate policies for replacing passenger cars and light trucks.
... 8. When using the recursive relationship, the solution procedure starts at the end and moves backward stage by stage each time finding the optimal policy for that stage until the optimal policy starting at the initial sage is found (Bellman [9] [10]; Wagner [11]; Waddle [12]; ...
This study examined the economic value or benefit that may accrue to the mining system due to machine replacement decisions with respect to electromagnetic separator machines, at Zenith Processor Tin Mining Company, Jos. A questionnaire and direct observation method were used to obtain data for the study and the data collected were interrogated to determine their disposition and integrity. Using the verified pertinent data, the investigation obtained optimal policy prescriptions which revealed that the machine should be replaced based on the age transition diagrams from the solution outputs of the equipment replacement optimization (ERO) problem. The results were achieved using the established structure of the sets of feasible equipment ages corresponding to various decision periods, in equipment replacement problems, which obviate the need for network diagrams for such determination. These sets of feasible ages provided the needed inputs for securing the optimal replacement policies and the corresponding rewards.
... 8. When using the recursive relationship, the solution procedure starts at the end and moves backward stage by stage each time finding the optimal policy for that stage until the optimal policy starting at the initial sage is found (Bellman [9] [10]; Wagner [11]; Waddle [12]; ...
This study examined the economic value or benefit that may accrue to the mining system due to machine replacement decisions with respect to electromagnetic separator machines, at Zenith Processor Tin Mining Company, Jos. A questionnaire and direct observation method were used to obtain data for the study and the data collected were interrogated to determine their disposition and integrity. Using the verified pertinent data, the investigation obtained optimal policy prescriptions which revealed that the machine should be replaced based on the age transition diagrams from the solution outputs of the equipment replacement optimization (ERO) problem. The results were achieved using the established structure of the sets of feasible equipment ages corresponding to various decision periods, in equipment replacement problems, which obviate the need for network diagrams for such determination. These sets of feasible ages provided the needed inputs for securing the optimal replacement policies and the corresponding rewards.
... The sequence of arcs at the lowest cost is the optimal solution. * ( ) = � Over time, the logic of the net visualization combined with DP has been applied to a large variety of equipment replacement applications (Abensur, 2015;Abensur et al., 2019;Adil & Gill, 1994;Ahmed, 1973;Altalabi et al., 2020a;Altalabi et al., 2020b;Bector et al., 2013;Bohner, 1994;Chukwunenye, 2016a, b;D'Aversa & Shapiro, 1978;Dreyfus, 1957Dreyfus, , 1960Espiritu & Coit, 2008a, b;Fan et al., 2011Fan et al., , 2012Fan et al., , 2013Fan et al., , 2014Fawcet & Forero, 2019;Feng & Figliozzi, 2012Gress et al., 2012;Hartman, 1998Hartman, , 1999Hartman, , 2000Hartman, , 2001Hartman & Hartman, 2001;Hartman & Murphy, 2006;Hartman & Rogers, 2006;Leung, 1983;Leung & Tanchoco, 1983, 1986Marques et al., 2005;Rahmawati & Shahab, 2019;Schwartz et al., 1971;Swathi, 2020;Tanchoco & Leung, 1987;Waddell, 1983;Whitin, 1968;Zvipore et al., 2015). ...
Equipment replacement is a definitive and relevant engineering decision. The aim of this work was to identify and organize the mathematical optimization proposals and solution search techniques that have contributed toward solving this problem. As a result, we classified the bibliographic materials we identified into seven distinct types of approaches. The work also provides an integrative overview of the level of complementarity of the categories we identified. The network visualization approach represented about 57% of the selected works and is still in use today. Nonetheless, since 2000 other approaches, such as fuzzy logic, real options, and machine learning have increased by 40% and become relevant current trends. Resumo: A substituição de equipamentos é uma relevante decisão de engenharia. O objetivo deste trabalho foi identificar e organizar as propostas de otimização matemática e as técnicas de busca de resultados que têm contribuído para a solução deste problema. Como resultado, classificamos os materiais bibliográficos identificados em sete tipos distintos de abordagens. O trabalho também fornece uma visão integradora do nível de complementaridade das categorias identificadas. A abordagem de visualização em rede representou cerca de 57% dos trabalhos selecionados e ainda está em uso. No entanto, desde 2000 outras abordagens, como lógica fuzzy, opções reais e aprendizado de máquina aumentaram 40% e se tornaram tendências atuais relevantes. Palavras-chave: Política de substituição de equipamentos; Programação matemática; Otimização.
... Dynamic programming is one of the most important methods in the fleet management. It is mostly applied to the RP (Eckles, 1968;Duncan and Scholnick, 1973;Kao, 1973;D'Aversa and Strategic vehicle fleet management Shapiro, 1978;Hayre, 1983;Waddell, 1983;Lohmann, 1986;Ohnishi et al., 1986;Jin and Kite-Powell, 2000;Hartman, 2001;Hartman, 2004;Hartman and Murphy, 2006;Cho and Rust, 2008;Martinez and van Wassenhove, 2009;Hsu et al., 2011;Inegbediona and Aghedob, 2018) and in some cases to the other fleet management problems, such as the FCP (Fagerholt, 1999) or the mixed FSP/RP (Navon and Maor, 1995). ...
Purpose
The purpose of this paper is to develop an original model and a solution procedure for solving jointly three main strategic fleet management problems (fleet composition, replacement and make-or-buy), taking into account interdependencies between them.
Design/methodology/approach
The three main strategic fleet management problems were analyzed in detail to identify interdependencies between them, mathematically modeled in terms of integer nonlinear programing (INLP) and solved using evolutionary based method of a solver compatible with a spreadsheet.
Findings
There are no optimization methods combining the analyzed problems, but it is possible to mathematically model them jointly and solve together using a solver compatible with a spreadsheet obtaining a solution/fleet management strategy answering the questions: Keep currently exploited vehicles in a fleet or remove them? If keep, how often to replace them? If remove then when? How many perspective/new vehicles, of what types, brand new or used ones and when should be put into a fleet? The relatively large scale instance of problem (50 vehicles) was solved based on a real-life data. The obtained results occurred to be better/cheaper by 10% than the two reference solutions – random and do-nothing ones.
Originality/value
The methodology of developing optimal fleet management strategy by solving jointly three main strategic fleet management problems is proposed allowing for the reduction of the fleet exploitation costs by adjusting fleet size, types of exploited vehicles and their exploitation periods.
... The equipment replacement optimization is one of the representative research fields. Waddell [2] did a research based on a case study from Phillips Petro Company to optimize 2 Journal of Advanced Transportation the replacement decisions for individual highway tractors. Hartman [3] took the replacement of equipment with net present value analysis into consideration. ...
As one of the effective methods to reduce congestion, grade intersection has already been changed to interchange in port collecting and distributing network (PCDN) of many Chinese ports, since the first interchange was built in the PCDN of Dalian port in 1924. Due to the growing demand for port freight transportation, congestion in PCDN is becoming one of the inevitable problems that need to be solved. This paper addresses the best interchange scheduling multistage decision problem in PCDN at a network level. The main challenges are how to estimate the delay time and cope with high uncertainties in port network and PCDN. Therefore, a simulation-based dynamic programming (DP) model is proposed with the purpose of minimizing total cost in lifetime period by combining a DP model and two nested simulation models together. Two simulation models are built to figure out the delay cost in the optimization model, which cannot be calculated by mathematical analysis due to complex vehicle travel patterns and irregular traffic volume caused by random events, such as the arrival pattern of ships’, natural conditions, and storage period of cargos. Finally, a real project in northern China is presented as a case study. The proposed method can be applied in similar cases and can help solve analogous complicated multistage problems.
... Equipment replacement models used. The equipment replacement models, estimates done, make annual savings of $ 90,000 for the Phillips Petroleum Company were (Waddell, R., 1983). ...
The goal of this article is to submitting linear programming methods and the solution of them for optimizing one of the IAU university financial instruction in Dezfool city branch for 18000 students. In this method the goal is to maximize the number of students who are using allocation loan from students convenience fund with after graduating rate of return according to section and educational courses. This problem with attention to financial resource providing and optimizing usage of them in the IAU university has much more importance rather than previous. So for solving this problem, we utilized operation research techniques and according to gathered data, the decision making was recognized systematically and linear programming model was formed after model solving and execution it in 2 semesters and comparing the results with previous semester, defined that selecting these choices with previous ones are the best, so the credit of them was approved, so we could defined the max number of students who are using allocation loan from convenience fund with after graduating rate of return, according to levels and educational branches, by the way, AHP technique has been used for making the model realistic in the objective function coefficients.
... A recursive relationship is available to traverse between the value of the decision at a stage N and the value of the optimum decisions at previous stages N+1. When using the recursive relationship, the solution procedure starts at the end and moves backward stage by stage -each time finding the optimal policy for that stage -until the optimal policy starting at the initial stage is found (Bellman 1995, Bellman 2003, Bertsekas 2001, Wagner 1975, Waddell 1983, Hartman 2005, Hartman and Murphy 2006. DP can generally be classified into two categories: DDP and SDP. ...
The primary function of equipment managers is to replace the right equipment at the right time and at the lowest overall cost. To accomplish this task, a theoretically sound and practically feasible equipment replacement optimization methodology has been developed so that a significant amount of money can potentially be saved. In this paper, the opportunities and challenges associated with equipment replacement decision making are discussed in detail. First, a comprehensive review of the state-ofthe art and state-of-the practice literature for the equipment replacement optimization (ERO) problem is conducted. Second, a dynamic programming (DP) based optimization solution methodology is presented to solve the ERO problem. The Bellman's formulation for the ERO deterministic (DDP) and stochastic dynamic programming (SDP) problems are discussed in detail. Finally, comprehensive ERO numerical results and implications are given. © (2012) by the Transportation Research Forum All rights reserved.
... Sin embargo, cuando el número de equipos es reducido, el problema ha sido formulado en términos de programación lineal entera ([1]), donde la técnica de relajación Lagrangeana es utilizada para resolverlo. En forma adicional, en este tipo de casos se ha utilizado programación dinámica ( [6]), en particular para el caso de un sólo equipo. ...
Resumen El reemplazo de equipos es una decisión que involucra aspectos de carácter estra-tégico y táctico debido a que ella determina los niveles de operación, las necesida-des de mantención y en definitiva la capacidad productiva. Este paper aborda el problema de reemplazo de equipos de alto valor (palas) en una mina chilena, fren-te a condiciones de operación complejas (alta interacción entre equipos debido a fallas, geometría de la mina, ley del material, entre otras), con un horizonte finito y requerimientos de extracción de material variables. Para ello, se desarrolló un modelo de programación dinámica que toma decisiones de parque (número de pa-las, tipo y edad) y reemplazo (compra, venta y/o baja). La interacción entre los equipos y las características operacionales fueron modeladas mediante una fun-ción de productividad de las palas asignadas a diversas operaciones.
... There is a vast body of work related to the problem of finding an optimal replacement policy of industrial machinery [8][9][10][11][12][13][14][15][16][17]. A more complicated problem arises when incorporating the effects of technological change [18][19][20], inflation and taxes [21], a limited budget [22], imperfect repairs [23][24] or warranties from the equipment supplier [25][26][27]. ...
This paper presents the evaluation, from a Decision Analysis point of view, of the feasibility of upgrading machinery at an existing metal-forming workshop. The Integral Decision Analysis (IDA) methodology is applied to clarify the decision and develop a decision model. One of the key advantages of the IDA is its careful selection of the problem frame, allowing a correct problem definition. While following most of the original IDA methodology, an addition to this methodology is proposed in this work, that of using the strategic Means-Ends Objective as a backbone for the development of the decision model. The constructed decision model uses influence diagrams to include factual operator and vendor expertise, simulation to evaluate the alternatives and a utility function to take into account the risk attitude of the decision maker. Three alternatives are considered: Base (no modification), C (installing an automatic lathe) and CF (installation of an automatic milling machine). The results are presented as a graph showing zones in which a particular alternative should be selected. The results show the potential of IDA to tackle technical decisions that are otherwise approached without the due care.
... This study identifies several key issues of the scrappage and I/M programs and develops models to address these issues. (Waddell 1983;Simms et al. 1984;Bean et al. 1994). ...
... Equipment replacement models used. The equipment replacement models, estimates done, make annual savings of $ 90,000 for the Phillips Petroleum Company were (Waddell, R., 1983). ...
The goal of this article is to submitting linear programming methods and the solution of
them for optimizing one of the IAU university financial instruction in Dezfool city branch for 18000
students. In this method the goal is to maximize the number of students who are using allocation loan
from students convenience fund with after graduating rate of return according to section and
educational courses. This problem with attention to financial resource providing and optimizing usage
of them in the IAU university has much more importance rather than previous. So for solving this
problem, we utilized operation research techniques and according to gathered data, the decision making
was recognized systematically and linear programming model was formed after model solving and
execution it in 2 semesters and comparing the results with previous semester, defined that selecting
these choices with previous ones are the best, so the credit of them was approved, so we could defined
the max number of students who are using allocation loan from convenience fund with after graduating
rate of return, according to levels and educational branches, by the way, AHP technique has been used
for making the model realistic in the objective function coefficients.
... With a finite time horizon and discrete time periods, a dynamic programming algorithm exists which finds optimal solutions for the single machine case. (Waddell 1983) describes such an approach. This algorithm runs quickly enough to be run for large time horizons, and does not require the assumption that costs are linear with regard to time. ...
... Waddell [40] analyzed the replacement of expensive highway tractors for Phillips Petroleum Company. At each node in his dynamic programming algorithm, the organization is faced with the following options: replace the equipment immediately, or retain it until the next opportunity for replacement. ...
This paper presents a survey of the various approaches used to determine the optimal inventory disposal amount, given a situation in which an organization finds itself with an excess of stock on hand. We examine both simple decision rules and analytical models that have been developed to deal with this problem. Analytical models are categorized into ones that consider the disposal decision in isolation, and those models in which an acquisition decision is combined with a concomitant disposal choice. We present some key directions for further research in this inventory management area.
... If replacement decisions for multiple assets are independent, then the parallel replacement problem can simply be split into several serial replacement problems. In this case, the significant complexity introduced by the parallel replacement problem may be avoided by applying serial replacement analysis to an "average" asset ( Waddell, 1983). Realistically, independence is commonly violated by concerns such as economies of scale in purchase of replacements, budget constraints, or asset utilization levels. ...
Graduation date: 2010 Data from a state department of transportation fleet shows that the usage of a typical asset decreases as it ages. One possible explanation for decreasing asset usage with age is operator preference for using the newest available asset. In this research the long-term cost and replacement implications of such a "newest first" usage practice are investigated for a fleet of similar assets with a fixed replacement age (age standard). Capital constraints on replacement are not considered. Comparisons are made to a "random" usage practice that results in constant expected usage as an asset ages. For most major cost categories, the newest first usage practice results in greater or equal costs. It is also shown that asset usage and fixed replacement age are interdependent under the newest first usage practice. The implications of this are that simple approaches found in the literature to address decreasing usage with age give incorrect results.
O presente artigo realiza uma comparação entre duas metodologias clássicas na estimativa de vida econômica e reposição de ativos, as quais são Programação Dinâmica e Anuidade Equivalentes. Além de comparar tais metodologias, são feitas uma revisão bibliográfica e uma aplicação delas para um estudo de caso. Conclui-se que por meio do método de Anuidades Equivalentes é possível atingir resultados mais precisos e menos trabalhosos quando comparado com o método de Programação Dinâmica. Contudo, este método se adequa melhor do que o primeiro em situações reais, principalmente para restrições orçamentárias e técnicas dos ativos.
O uso eficiente dos ativos fixos é um dos principais objetivos na administração de empresas do setor de transporte urbano. Os veículos de transporte determinam o nível de serviço oferecido e impactam significativamente na eficiência dos inputs envolvidos no seu uso. O administrador pode otimizar a rentabilidade e o nível de serviço oferecido através da escolha do veículo apropriado e da definição da taxa de substituição do equipamento no tempo. Este artigo apresenta uma metodologia para a substituição de frotas de ônibus por meio da integração de critérios econômicos e não-econômicos. Aspectos econômicos são contemplados por indicadores econômicos e fluxo de caixa, utilizando custos de aquisição e manutenção da frota, entre outros. Aspectos não-econômicos são representados por decisões estratégicas e de gestão, sendo avaliados por intermédio de ferramentas de decisão múltipla. A metodologia proposta possibilitou avaliação detalhada do desempenho dos ônibus atuais frente a potenciais substitutos, viabilizando constante monitoramento dos ativos da empresa e assegurando elevados níveis de serviço ao cliente. A metodologia é ilustrada em uma empresa pública de transporte urbano.
Sustainable procurement is an emerging theme in the construction industry across the globe. However, organizations in the construction industry often encounter impediments in improving environmental performance in construction projects, especially in procurement. Besides its other facets, procurement of construction equipment is inherited to be capital-intensive and vital for managing environmental concerns associated with built environment projects. In this regard, selection criteria in such procurement processes are generally supportive of considering cost and engineering specifications as key parameters. However, sustainability apprehensions in today’s Malaysian construction industry have mounted pressure on industry professionals to rethink their equipment acquisition strategies. The notion of green or sustainable procurement is still infancy for the Malaysian construction industry and facing challenges for embedding it in the current procurement practices. This research aims to address these apprehensions by considering six main criteria, namely, life cycle cost (LCC), performance (P), system capability (SC), operational convenience (OC), environmental impact (EI), and social benefits (SBs), and their 38 subcriteria towards procurement of sustainable construction equipment. A multicriteria-based equipment selection framework on the triple bottom line of sustainability in the context of the Malaysian construction industry has been developed and tested. The application of analytical hierarchy process (AHP) established the sustainable procurement index with a consistent sensitivity analysis results. As such, the proposed procurement index shall help decision-makers in the process of the acquisition of sustainable construction equipment in Malaysia.
O problema de substituição de equipamentos é analisado tradicionalmente por duas metodologias discretas: programação dinâmica e indicadores de fluxo de caixa. Constatou-se que essas metodologias não conseguem verificar se (i) o momento ótimo de substituição de equipamentos é único e (ii) se existiria algum ativo físico que não precisasse ser substituído, isto é, um equipamento sem momento ótimo de substituição do ponto de vista econômico. Sendo assim, os autores utilizaram neste trabalho uma abordagem com funções contínuas para resolver esse tipo de problema. No processo de estabelecê-las, chegou-se em funções não diferenciáveis (no sentido clássico). Logo, foi utilizada uma análise não suave para modelagem. Pelos resultados obtidos é possível afirmar que de fato o momento ótimo de substituição é único. Além disso, também verificou-se que pode existir equipamentos sem momento ótimo para substituição. Mais ainda, também foi viável formular um modelo para calcular o momento ótimo de substituição de equipamentos por função contínua, conforme são dados os custos de manutenção, o valor de aquisição, a taxa de desvalorização e a taxa de desconto.
Due to the excess of a vehicle operation through its life, some elements may face failure and deteriorate with time. This leads us to carry out maintenance, repair, tune up or full overhaul. After a certain period, the vehicle elements deteriorations increase with time which causes a very high increase of doing the maintenance operations and their costs. However, the logic decision at this point is to replace the current vehicle by a new one with minimum failure and maximum income. The importance of studying vehicle replacement problems come from the increase of stopping days due to many deteriorations in the vehicle parts. These deteriorations increase year after year causing an increase of operating costs and decrease the vehicle income. Vehicle replacement aims to determine the optimum time to keep, maintain, overhaul, renew and replace vehicles. This leads to an improvement in vehicle income, total operating costs, maintenance cost, fuel and oil costs, ton-kilometers, vehicle and engine performance, vehicle noise, vibration, and pollution. The aim of this paper is to find the optimum replacement policies of Kuwait Passenger Transport Company (KPTCP) fleet of busses. The objective of these policies is to maximize the busses pure profits. The dynamic programming (D.P.) technique is used to generate the busses optimal replacement policies.
The purpose of this paper is to present an optimization model formulation based on deterministic dynamic programming (DDP) and to propose both the Bellman and Wagner approaches to solve the problem of equipment replacement optimization (ERO). The developed solution methodology is general and can be used to make optimal keep and replace decisions for new and used vehicles, with and without annual budget considerations. A simple numerical example illustrates and steps through the Bellman DDP solution process and demonstrates how DDP is used to solve the ERO problem through backward recursion. The developed DDP-based ERO software is tested and validated with Texas Department of Transportation vehicle fleet data. Comprehensive numerical results, such as the software computational time and solution quality, are described. Substantial cost savings are estimated with this ERO software. Further research directions are suggested.
In the context of mining, drilling is the process of making holes in the face and walls of
underground mine rooms, to prepare those rooms for the subsequent operation, which is the
charging process. Due to the nature of the task, drilling incurs a high number of drilling rig
failures. Through a combination of a harsh environment (characterised by dust, high humidity,
etc.), the operating context, and reliability and maintainability issues, drilling rigs are identified
as a major contributor to unplanned downtime.
The purpose of the research performed for this thesis has been to develop methods that can be
used to identify the problems affecting drilling rig downtime and to identify the economic
lifetime of drilling rigs. New models have been developed for calculating the optimum
replacement time of drilling rigs. These models can also be used for other machines which
have repairable or replaceable components. Based on an analysis performed in a case study, a
life cycle cost (LCC) optimization model has been developed, taking the most important
factors affecting the economic replacement time of drilling rigs into consideration. To this end,
research literature studies and case studies have been performed, interviews have been held,
observations have been made and data have been collected. For the data analysis, theories and
methodologies within reliability, maintainability, ergonomics and optimization have been
combined with the best practices from the related industries.
Firstly, this thesis analyses the downtime of the studied drilling rigs, with the precision and
uncertainty of the estimation at a given confidence level, along with the factors influencing the
failures. Secondly, the thesis identifies components that significantly contribute to the
downtime and the reason for that downtime (maintainability and/or reliability problems).
Based on the failure analysis, some minor suggestions have been made as to how to improve
the critical components of the drilling rig. Thirdly, a new method is proposed that can help
decision makers to identify the replacement time of reparable equipment from an economic
point of view. Finally, the thesis proposes a method using the artificial neural network (ANN)
for predicting the economic lifetime of drilling rigs through a series of basic weights and
response functions. This ANN-based method can be made available to engineers without the
use of complicated software.
Most of the results are related to specific industrial and scientific challenges, such as planning
for cost-effectiveness. The results of the case study are promising for the possibility of making a
significant reduction in the LCC by optimizing the lifetime. The results have been verified
through interaction with experienced practitioners from both the manufacturer and the mining
company using the drilling rig in question.
This paper provides a comprehensive literature review of the state of the art and state of the practice of equipment replacement optimization (ERO). A comprehensive dynamic programming (DP)-based optimization solution methodology is then proposed and implemented for ERO. The developed ERO software consists of three main components: a SAS macro-based data cleaner and analyzer, which undertakes the tasks of raw data reading, cleaning, and analyzing, as well as cost estimation and forecasting; a DP-based optimization engine that minimizes the total cost over a defined horizon; and a Java-based graphical user interface (GUI) that takes parameters selected by users and inputs from users, and coordinates the optimization engine and SAS macro-based data cleaner and analyzer. The first component (i.e., the SAS macro-based data cleaner and analyzer) is presented in detail. Preliminary numerical results of the SAS data analysis, estimation, and forecasting of several costs are also discussed. In a later report of research, the DP-based optimization engine and ERO software development (including the Java GUI) will be presented in detail, and comprehensive ERO numerical results will be given.
Researchers exploring the adoption of decision aids by managers have noted an apparent reluctance on the part of managers to use decision aids such as linear programming and mathematical forecasting models. In this study, the leader's attributions were explored as a possible explanation for this reluctance. Specifically, the effects of the subordinate's use of a decision aid on the supervisor's attributions of the causes of that performance were examined in a vignette to which 154 students who were employed full time as managers responded. Four conditions were explored: success while using decision aids, failure while using decision aids, success without using decision aids, and failure without using decision aids. Analysis suggests that for successful outcomes the use of a decision aid did not significantly affect the supervisor's attributions, but with failure, supervisors were more likely to attribute the cause of the failure to some quality of the subordinate (lack of ability or effort) when decision aids were used than when they were not. Such results imply that managers who use decision aids incur greater risk in the event of failure, as the cause of that failure is attributed more often to them rather than the situation when decision aids were not used.
The equipment replacement problems are normally solved using dynamic programming models. However, this approach has drawbacks such as ‘curse of dimensionality’. Some recent approaches use 0-1 integer programming models in an attempt to off set the drawbacks of dynamic programming. However, applicability of such models is restricted to smaller sized problems, because computer time taken becomes prohibitive as the problem size grows. In this paper, a formulation is proposed which can be used for very large sized problems, since the linear programming relaxation of this formulation always yields integer solution.
We propose a simple method for solving an equipment replacement problem. The algorithm yields alternative optimal solutions, if any, as well. It is expected that further extensions to this approach to solve group replacement problems may be possible.
In this paper, a stochastic dynamic programming (SDP) based optimization model is formulated for the equipment replacement optimization (ERO) problem that can explicitly account for the uncertainty in vehicle utilization. The Bellman approach is developed and implemented to solving the ERO SDP problem. Particular attention is paid to the SDP state-space growth and special scenario reduction techniques are developed to resolve the "curse of dimensionality" issue that is inherent to the dynamic programming method to ensure that the computer memory and solution computational time required will not increase exponentially with the increase in time horizon. SDP software computer implementation techniques, functionalities and the Graphical User Interfaces (GUI) are discussed. The developed SDP-based ERO software is tested and validated using the current Texas Department of Transportation (TxDOT) vehicle fleet data. Comprehensive numerical results, such as statistical analyses, the software computational time and solution quality, are described and substantial cost-savings have been estimated by using this ERO software. Finally, future research directions are also suggested.
Replacing equipment is an important decision that nearly all entities must face, generally motivated by rising operating and maintenance costs of current assets or the technological advances of available assets in the market. The problem has been studied for nearly a century. In this article, we survey single and multiple asset solution approaches under a variety of settings, including technological change, variable utilization, tax, and various uncertainties. Furthermore, we illustrate a number of open problems that are worthy of future study.
We developed and implemented a model-based replacement process for a diverse fleet of vehicles at U S WEST, a major telecommunications company (since June 2000, Qwest Communications International). The model considers relevant age-dependent factors, including annual maintenance cost, opportunity cost of downtime, depreciation, and salvage value. It assigns a replacement score to each candidate vehicle based on age, type, estimated replacement cost, and estimated maintenance cost in the next year of operation. The model then rank-orders the vehicles by score and identifies them for replacement subject to a budget constraint on fleet capital expenditure. Through implementation of the model-based process, the company expects an annual benefit of more than $13 million.
In this paper, we propose a 0-1 integer programming formulation for an equipment replacement problem in which the demand of a product varies from period to period and different types of equipment with different production capacities are available. Since all the variables involved in the model are restricted to have binary values, the model is fairly efficient and hence can be used for large-sized problems. The use of the model is demonstrated with the help of some numerical examples.
We formulate a deterministic equipment replacement problem (which is normally solved through the use of dynamic programming) as a 0-1 linear programming problem. The advantage of such a formulation is that it does not require a high degree of expertise, insight or ‘art’ (i.e. it is thus rather easily understood by practitioners), does not suffer from the so-called ‘curse of dimensionality’, a short-coming of dynamic programming, and can always yield optimal solution to fairly big sized problems using available software. A numerical example is solved on a personal computer and interpretation of the results is provided.
This paper presents network models to determine the optimal replacement policy for a fleet of vehicles over a finite planning horizon. First, a minimum cost-flow model is developed to determine the optimal replacement schedule for a fleet of fixed size consisting of a single type of vehicle of various ages. The model is then extended to allow for restrictions on capital expenditures that limit the purchase of new vehicles in any time period and to allow for fluctuations in the fleet size due to planned expansion or retrenchment. Finally, a multi-commodity network model is developed for a fleet consisting of multiple vehicle types and ages.
Dynamic network flow models describe network-structured, decision-making problems over time. They are of interest because of their numerous applications and intriguing dynamic structure. The dynamic models are specially structured problems that can be solved with known general methods. However, specialized techniques have been developed to exploit the underlying dynamic structure. Here, we present a state-of-the-art survey of the results, applications, algorithms and implementations for dynamic network flows.
A high percentage of a new weapons systems components are usually identical to existing components in the inventory or components which can be slightly modified to serve the same purpose. Thus COD can rely upon field experience to determine the proper quantity of these components for Tables of Allowance (TA). In determining the proper allowance for such tables, only 20 percent of a new aircraft's components must rely heavily upon estimates of failure rates and average repair times of the craft. This report centers on techniques involved in answering the complex questions of equipment, spares, meantime between failures (MTBF), and service time trade-off. Actual data were used to validate the model and confirm its logic and potential value.
This paper provides a literature review on ejectors and their applications in refrigeration. A number of studies are grouped and discussed in several topics, i.e. background and theory of ejector and jet refrigeration cycle, performance characteristics, working fluid and improvement of jet refrigerator. Moreover, other applications of an ejector in other types of refrigeration system are also described.
Replacement analysis involves an area of engineering economics with many special models and many detailed rules. In this paper a unified framework for replacement analysis is presented. The framework consists of a four-step method appropriate for engineering economics decisions and a classification of some traditional and current replacement models and analysis techniques. Methods are derived for analyzing finite-horizon models and infinite-horizon models with and without technological change. The models and analysis are compared with the models and analysis of Terborgh and Oakford.
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