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A parallel machine replacement model

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  • Tim McClurg
  • Suresh Chand

Abstract

This paper considers a finite horizon parallel machine replacement problem where a fixed number of machines is in operation at all times. The operating cost for a machine goes up as the machine gets older. An older machine may have to be replaced by a new one when its operating cost becomes too high. There is a fixed order cost associated with the purchase of new machines. Machine purchase prices and salvage values may depend on the period in which they were purchased. The objective is to find a replacement plan that minimizes the total discounted cost over the problem horizon. We believe that the costs in our model are more commonly observed in practice than those previously used in the literature. The paper develops properties of optimal solutions and an efficient forward‐time algorithm to find an optimal replacement plan. A dominance property is developed that further limits the options to be considered, and a simple forecast horizon result is also presented. Future research possibilities are mentioned. © 2002 Wiley Periodicals, Inc. Naval Research Logistics 49: 275–287, 2002; Published online in Wiley InterScience (http://www.interscience.wiley.com). DOI 10.1002/nav.10012

Suggested Citation

  • Tim McClurg & Suresh Chand, 2002. "A parallel machine replacement model," Naval Research Logistics (NRL), John Wiley & Sons, vol. 49(3), pages 275-287, April.
    • Handle: RePEc:wly:navres:v:49:y:2002:i:3:p:275-287
    DOI: 10.1002/nav.10012
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    References listed on IDEAS

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    1. Wallace J. Hopp & Philip C. Jones & James L. Zydiak, 1993. "A further note on parallel machine replacement," Naval Research Logistics (NRL), John Wiley & Sons, vol. 40(4), pages 575-579, June.
    2. Jorgenson, Dale W, 1996. "Empirical Studies of Depreciation," Economic Inquiry, Western Economic Association International, vol. 34(1), pages 24-42, January.
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    4. Chand, Suresh & McClurg, Tim & Ward, Jim, 2000. "A model for parallel machine replacement with capacity expansion," European Journal of Operational Research, Elsevier, vol. 121(3), pages 519-531, March.
    5. Hulten, Charles R. & Wykoff, Frank C., 1981. "The estimation of economic depreciation using vintage asset prices : An application of the Box-Cox power transformation," Journal of Econometrics, Elsevier, vol. 15(3), pages 367-396, April.
    6. Philip C. Jones & James L. Zydiak & Wallace J. Hopp, 1991. "Parallel machine replacement," Naval Research Logistics (NRL), John Wiley & Sons, vol. 38(3), pages 351-365, June.
    7. Suresh Sethi & Suresh Chand, 1979. "Planning Horizon Procedures for Machine Replacement Models," Management Science, INFORMS, vol. 25(2), pages 140-151, February.
    8. Suresh Chand & Tim McClurg & Jim Ward, 1993. "A single‐machine replacement model with learning," Naval Research Logistics (NRL), John Wiley & Sons, vol. 40(2), pages 175-192, March.
    9. Sethi, Suresh P. & Taksar, Michael I. & Presman, Ernst L., 1995. "Erratum," Journal of Economic Dynamics and Control, Elsevier, vol. 19(5-7), pages 1297-1298.
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