Properties of optimal service life under technological change

Yuri Yatsenko and Natali Hritonenko

International Journal of Production Economics, 2008, vol. 114, issue 1, 230-238

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.

Date: 2008
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Persistent link: https://EconPapers.repec.org/RePEc:eee:proeco:v:114:y:2008:i:1:p:230-238

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