Capital Equipment Replacement Under Technological Change

Mardin, Farid; Arai, Takeshi

doi:10.1080/0013791x.2012.677112

Cited by 21 publications

(12 citation statements)

References 10 publications

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“…The recent research effort has been focused on the problem of optimal replacement Downloaded by [Seton Hall University] at 11:27 01 December 2014 when certain condition information about the system is available (which is often the case in PSS), such as temperature, humidity, vibration levels, or the amount of metal particles in a lubricant (Banjevic et al 2001;Ghasemi et al 2007;Kharoufeh et al 2010;Wu and Ryan 2010). Some authors have also studied the effect of technological advances on the optimal lifetime and the optimal replacement of the assets (Mardinab and Araib 2012;Yatsenko and Hritonenko 2009). As to the inventory management policies, a rapidly growing body of research in the operations management of closed-loop supply chains recognizes and tries to mitigate the complexities of managing the supply chain involving remanufacturable products under traditional product sales (Aras et al 2004;Fleischmann et al 1997;Guide 2000;Guide and Van Wassenhove 2009).…”

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confidence: 98%

Joint Optimization of Asset and Inventory Management in a Product–Service System

Ryan

2014

The Engineering Economist

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We propose an integrated model of the asset management decisions for a fleet of identical product units and the inventory management decisions for a closed-loop supply chain in the context of a product-service system, in which the two types of decisions are closely coupled. A joint optimization technique is developed to obtain the parameters of the operational policy for the integrated model that minimize the long run average cost rate. A numerical example is provided to illustrate the computational procedures. In addition, the effect of a simplifying assumption that the replaced products have no quality difference is evaluated and the results suggest that as long as the quality difference between the preventively replaced products and failure replaced products is not too big, the simplification to treat them as one category is reasonable.

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confidence: 98%

Joint Optimization of Asset and Inventory Management in a Product–Service System

Ryan

2014

The Engineering Economist

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“…The two-cycle VH replacement method (8)-(9) was analyzed in (Scarf and Hashem, 1997, 2002, Yatsenko and Hritonenko, 2011 and recommended for use under improving technology, mainly, because it performs better than the EL method. Minor modifications of the two-cycle method were exploited in (Scarf et al, 2007, Mardin andTakeshi, 2012). However, a more scrupulous analysis discovers drawbacks of this method and shows simple ways to improve its efficiency in situations with continuous technological improvement.…”

Section: Variable-horizon Replacement Methodsmentioning

confidence: 96%

Algorithms for asset replacement under limited technological forecast

Yatsenko

Hritonenko

2015

International Journal of Production Economics

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“…Schneider (1978), which applied financial methods to propose a model for the valuation of asset replacement, represents a key contribution in this regard. More recently, Regnier et al (2004) and Mardin and Arai (2012) made substantial contributions to the replacement problem. Regnier et al (2004) evaluated the cost savings achievable in the infinite horizon single-asset replacement problem by considering technological progress affecting assets available after multiple future replacements.…”

Section: A Financial Valuation Model To Support the Repowering Decisionmentioning

confidence: 99%

“…They also allowed for variable service lives. Mardin and Arai (2012) modified the challenge-defender method. They proposed a methodological alternative to outperform the original challenge-defender method and in some cases the original economic life method.…”

Section: A Financial Valuation Model To Support the Repowering Decisionmentioning

confidence: 99%

Analyzing the Techno-Economic Determinants for the Repowering of Wind Farms

Silvosa

Gómez

Rı́o

2013

The Engineering Economist

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The aim of this article is to identify the relative importance of technical and economic variables in the financial feasibility of repowering wind farm projects. A financial valuation model is developed. We carry out a sensitivity analysis with several variables considered to be key in the repowering decision. The most relevant technical variable is the increase in production efficiency and the most relevant economic variable is the capital expenditures in new equipment. Furthermore, the decision to repower critically depends upon the level of support being provided. The repowering project would not be feasible in the absence of support.Determinants for the Repowering of Wind Farms 283 of activities at existing projects and investments in new wind capacity (i.e., so-called greenfield projects). This requires an analysis of different variables and factors that may act as drivers or barriers in the repowering decision. Furthermore, a wider perspective suggests that these projects may have significant positive externalities in terms of environmental and socioeconomic benefits 1 (see Del Río et al. 2011). Therefore, public authorities may consider providing financial support for repowering projects, depending on the comparison of their social and private benefits and cost with those of other alternatives.The aim of the present article is to identify and discuss the relative importance of technical and economic variables in the financial feasibility of repowering wind farm projects. A financial valuation model is developed that considers the particularities of these projects. This model allows us to carry out a sensitivity analysis with several key variables, including changes in installed capacity, production efficiency, capital expenditures, operation and maintenance (O&M) costs, and public support. The results are relevant for both project investors and public authorities.Accordingly, the article is structured as follows. The next section discusses the determinants for repowering that are relevant from a project investor perspective. The financial valuation model that allows us to assess the relevance of the main technical and economic variables is developed next. A sensitivity analysis of the decision to repower with respect to changes in those variables is then performed, based on information from Spanish wind farms. The article closes with some concluding remarks and suggestions for further research.

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Capital Equipment Replacement Under Technological Change

Cited by 21 publications

References 10 publications

Joint Optimization of Asset and Inventory Management in a Product–Service System

Joint Optimization of Asset and Inventory Management in a Product–Service System

Algorithms for asset replacement under limited technological forecast

Analyzing the Techno-Economic Determinants for the Repowering of Wind Farms

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