COMPARISON OF ALTERNATIVE EQUIPMENT REPLACEMENT STRATEGIES: SPECIAL CASES

Abstract

In this paper, we consider special cases that arise when solving the problem of phased replacement of equipment, which were not paid attention to in the works devoted to methods for solving this problem. It is a continuation of the study conducted in [8]. When solving the problem by dynamic programming, sometimes a situation arises when there are elements in the replacement zone for which it is more preferable to keep the equipment. There are several ways to overcome this problem. Some of them are considered in [8]. This study involves an extension of the planning period, which allows us to consider and compare alternative update strategies. The increase in the planning period allows us to consider the possibility of keeping equipment of a greater age, if it brings more profit than replacing it. On the other hand, the degree of confidence in the indicators in the last intervals of this period is reduced, which is associated with a change in market conditions and a decrease in the reliability of long-term forecasts. The application of various methods to eliminate the above problem is demonstrated by an abstract example. A comparison of various update strategies based on an analysis of the distribution of profits by years of the planning period is carried out. The distribution of investments by year is also considered, which significantly affects the choice of the optimal update strategy. Attention is focused on the fact that the decision-maker is more inclined to choose strategies that bring greater profit in the initial intervals of the planning period and require a more even distribution of investments. For simplicity, this example assumes an even distribution of equipment by age at the beginning of the planning period. However, the formulas given for calculating profits and investments are universal and can be used in any practical calculations. In conclusion, it should be noted that the most effective approaches described are in the selection of optimal equipment upgrade strategies with a short period of obsolescence. Moreover, the interval (step) of the planning period may not be equal to a year, but to a quarter of a year or a month.