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Properties of optimal service life under technological change

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  • Yatsenko, Yuri
  • Hritonenko, Natali

Abstract

The authors develop a new approach to model the optimal policies of machine replacement under technological change. They consider a single-machine replacement problem in continuous time and reduce it to a nonlinear integral equation for the variable optimal service life of machine. A qualitative analysis of this equation leads to new dynamic properties of the optimal replacement. A numeric example on industrial data about car replacement illustrates obtained analytic results. It confirms the validity and robustness of the developed technique and demonstrates its practical advantages.

Suggested Citation

  • Yatsenko, Yuri & Hritonenko, Natali, 2008. "Properties of optimal service life under technological change," International Journal of Production Economics, Elsevier, vol. 114(1), pages 230-238, July.
    • Handle: RePEc:eee:proeco:v:114:y:2008:i:1:p:230-238
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    References listed on IDEAS

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    1. Malcomson, James M., 1975. "Replacement and the rental value of capital equipment subject to obsolescence," Journal of Economic Theory, Elsevier, vol. 10(1), pages 24-41, February.
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    3. Yu. Yatsenko & N. Hritonenko, 2007. "Network economics and optimal replacement of age-structured IT capital," Mathematical Methods of Operations Research, Springer;Gesellschaft für Operations Research (GOR);Nederlands Genootschap voor Besliskunde (NGB), vol. 65(3), pages 483-497, June.
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    7. James C. Bean & Jack R. Lohmann & Robert L. Smith, 1994. "Equipment replacement under technological change," Naval Research Logistics (NRL), John Wiley & Sons, vol. 41(1), pages 117-128, February.
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    9. S. Bylka & S. Sethi & G. Sorger, 1992. "Minimal forecast horizons in equipment replacement models with multiple technologies and general switching costs," Naval Research Logistics (NRL), John Wiley & Sons, vol. 39(4), pages 487-507, June.
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    1. Yatsenko, Yuri & Hritonenko, Natali, 2020. "Optimal asset replacement: Profit maximization under varying technology," International Journal of Production Economics, Elsevier, vol. 228(C).
    2. Yatsenko, Yuri & Hritonenko, Natali, 2015. "Algorithms for asset replacement under limited technological forecast," International Journal of Production Economics, Elsevier, vol. 160(C), pages 26-33.
    3. Yatsenko, Yuri & Hritonenko, Natali, 2017. "Machine replacement under evolving deterministic and stochastic costs," International Journal of Production Economics, Elsevier, vol. 193(C), pages 491-501.
    4. Natali Hritonenko & Yuri Yatsenko, 2012. "Fleet replacement under technological shocks," Annals of Operations Research, Springer, vol. 196(1), pages 311-331, July.
    5. Yatsenko, Yuri & Hritonenko, Natali, 2011. "Economic life replacement under improving technology," International Journal of Production Economics, Elsevier, vol. 133(2), pages 596-602, October.
    6. Nguyen, T.P. Khanh & Yeung, Thomas G. & Castanier, Bruno, 2013. "Optimal maintenance and replacement decisions under technological change with consideration of spare parts inventories," International Journal of Production Economics, Elsevier, vol. 143(2), pages 472-477.

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