Algorithms for asset replacement under limited technological forecast

Yuri Yatsenko and Natali Hritonenko

International Journal of Production Economics, 2015, vol. 160, issue C, 26-33

Abstract: The optimal asset replacement is analyzed when the future course of technological change is known on a limited future horizon. Comparison of factual and desired properties of known replacement methods leads us to the idea of how to improve their efficiency under changing technology reflected in decreasing operating and new asset costs. We introduce new modifications of the economic life and two-cycle variable-horizon methods by correcting their capital recovery factor. Next, we demonstrate that the modified methods deliver solutions equal or close to the infinite-horizon replacement under technological change.

Keywords: Asset replacement models; Economic life; Technological change; Finite horizon; Optimization (search for similar items in EconPapers)
Date: 2015
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Citations: View citations in EconPapers (6)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:proeco:v:160:y:2015:i:c:p:26-33

DOI: 10.1016/j.ijpe.2014.08.020

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