Pa. Scarf et Ah. Christer, APPLICATIONS OF CAPITAL REPLACEMENT MODELS WITH FINITE PLANNING-HORIZONS, International journal of technology management, 13(1), 1997, pp. 25-36
Citations number
22
Categorie Soggetti
Management,Engineering,"Operatione Research & Management Science
Capital replacement models with finite planning horizons can be used t
o model replacement policies in complex operational contexts. They may
also be used to investigate the cost consequences of technological ch
ange. This paper reviews the application of these models in various su
ch contexts. We also compare fixed planning horizon models with variab
le planning horizon models. As technological change, and hence the req
uirement of users and customers, often drives replacement decisions ra
ther than cost optimality, the modelling focuses not only on obtaining
optimal policies, but also on determining the increased cost of sub-o
ptimal policies. The role of penalty cost formulations is also discuss
ed. These ideas are illustrated using a number of case histories from
medicine and transport.