Optimization of Vehicle Fleet Replacement Decisions and Fuel Cost Dynamics in the Nigerian Transport Sector

Any country’s economic growth and social mobility are largely dependent on the transportation industry (Inegbedion & Aghedo, 2018). In Nigeria, a country with a vast and diverse population, efficient transportation is not only essential for connecting people and goods but also for fostering economic growth and prosperity. The Nigerian transport sector has historically been supported by fuel subsidies, which have alleviated the financial burden on both consumers and businesses (Ismail, Hezekiah & Bilikisu, 2014). However, recent policy changes, including the removal of fuel subsidies, have introduced new challenges and considerations for fleet managers and stakeholders in the transport industry. The primary goal of replacement policy is to determine an item’s economic life, as retaining an item longer than necessary may result in a decline in the profit generated by the item’s use. Making the decision to replace the equipment at the appropriate stage of its useful life will maximize the profit from the equipment (Hossam, Ahmed, & Ahmed, 2023). The transition from subsidized fuel to market-based fuel prices has brought about significant shifts in operating costs for transportation companies, necessitating a re-evaluation of their fleet management strategies (Ismail et al. 2014). The decision to replace aging vehicles involves a complex interplay of economic, operational, and environmental factors, all of which must be balanced to ensure the sustainability and efficiency of transport operations. In light of this, it is in everyone’s best interest from a practical standpoint to justify the best terms for equipment renewal. (Lapkina & Malaksiano, 2023).