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Overhaul Policy Optimization and Equipment Valuation Concerning Its Reliability

Author

Listed:
  • Smolyak, S.

    (Central Economics and Mathematics Institute Russian Academy of Sciences, Moscow, Russia)

Abstract

Valuation of used machinery and equipment items and optimization of the overhaul policy are considered as interrelated problems. Non-traditional version of the discounted cash flow method is applied to their decision. The model uses available market and technical information and takes into account both the planned overhauls and the ones due to random failures. The model allows to find the dependence of the value of equipment item on its age and working time in the current overhaul interval and also operatively to make a well-grounded choice between overhaul and decommissioning of an item.

Suggested Citation

  • Smolyak, S., 2014. "Overhaul Policy Optimization and Equipment Valuation Concerning Its Reliability," Journal of the New Economic Association, New Economic Association, vol. 22(2), pages 102-131.
    • Handle: RePEc:nea:journl:y:2014:i:22:p:102-131
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    References listed on IDEAS

    as
    1. Scarsini, Marco & Shaked, Moshe, 2000. "On the value of an item subject to general repair or maintenance," European Journal of Operational Research, Elsevier, vol. 122(3), pages 625-637, May.
    2. Bartholomew-Biggs, Michael & Zuo, Ming J. & Li, Xiaohu, 2009. "Modelling and optimizing sequential imperfect preventive maintenance," Reliability Engineering and System Safety, Elsevier, vol. 94(1), pages 53-62.
    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    machinery; equipment; value; valuation; best use; reliability; failure; overhaul; overhaul interval; management; discounted cash flow method;
    All these keywords.

    JEL classification:

    • C44 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods: Special Topics - - - Operations Research; Statistical Decision Theory
    • C61 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Optimization Techniques; Programming Models; Dynamic Analysis
    • D46 - Microeconomics - - Market Structure, Pricing, and Design - - - Value Theory
    • L64 - Industrial Organization - - Industry Studies: Manufacturing - - - Other Machinery; Business Equipment; Armaments
    • M21 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Business Economics - - - Business Economics

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