Replacement decisions with multiple stochastic values and depreciation

A value-at-risk approach to optimisation of warranty policy

“…Ahmadi (2016) addresses an optimal replacement problem for complex multi-component systems by determining an optimal operating time which balances income and cost to maximizes the expected profit over a cycle. Adkins and Paxson (2017) construct a general replacement model for a multi-component product with considering the salvage value and depreciation in operating. Chen, Lo, and Weng (2017) seek to maximize the total profit per item of a multi-component product through optimally determine the production run length and the warranty period.…”

Elaboration of the equipment replacement terms taking into account wear and tear and obsolescence

“…In [1] and [2], the optimum terms of equipment replacement under the conditions when operating costs of equipment are subject to random fluctuations have been investigated. Also in [1], the issues of the influence of tax rates on the determination of optimum terms of equipment utilization have been studied. In [2], the influence of random fluctuations in the equipment utilization rate on the optimum service life has been examined.…”

“…In [2], the influence of random fluctuations in the equipment utilization rate on the optimum service life has been examined. However, in [1,2] the possibility of capital repairs of equipment and the obsolescence factor have not been taken into account.…”

“…In a number of works, including [1][2][3][4][5][6][7][8][9][10][11], when determining the optimum terms of equipment replacement, only the factor of wear and tear or only the factor of emergence of new technologies has been taken into account. Also, many authors emphasize the need to study the influence of the random factor in justifying the equipment replacement terms.…”

Investment Decisions with Two-Factor Uncertainty

“…In the context of replacement options, Adkins and Paxson (2013a) examine premature and postponed replacement in the presence of technological progress, where revenue and operating costs are treated as stochastic. Adkins and Paxson (2017) use a general replacement model to investigate when it is optimal to replace an asset whose operating cost and salvage value deteriorate stochastically. In addition, the quasi-analytical approach is applied to investment problems in the energy sector.…”