A Stochastic Constrained Optimal Replacement Model: The Case of Ship Replacement

Peter J. Kalman
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Peter J. Kalman: Stale University of New York, Stony Brook, New York

Operations Research, 1972, vol. 20, issue 2, 327-334

Abstract: This paper formulates a stochastically constrained equipment replacement model. Its aim is to determine a sequence of replacement dates such that the total “current account” cost of all future costs and capital expenditures over an infinite time horizon for the n initial incumbent machines is minimized subject to the constraints that, at each point in time, the expected number of machines in each of several “utility classes” has a prescribed value. The theoretical model is then solved under a set of simplifying assumptions and applied to the problem of ship replacement.

Date: 1972
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Persistent link: https://EconPapers.repec.org/RePEc:inm:oropre:v:20:y:1972:i:2:p:327-334

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