Optimal Age For Equipment Replacement

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Professor Hossein Arsham

The performance of almost everything declines with age such as machines. Although a routine maintenance can keep the equipment working efficiently, but there comes a point when the repairs are too expensive and it is less expensive to buy a replacement.

This JavaScript computes the best time to replace equipment, and provides the average cost during its usage.

Enter up-to-28 pairs of (Resale value, and the Running cost in previous period) starting from age 0. For the first column, that is, for age zero, the "resale value" is the price, and its "running cost" is always equal to zero. After entering the data correctly, then click the Calculate button. Blank boxes are not included in the calculations but zeros are.

In entering your data to move from cell to cell in the data-matrix use the Tab key not arrow or enter keys.

To edit your data, including add/change/delete, you do not have to click on the "clear" button, and re-enter your data all over again. You may simply add a pair of numbers to any blank cells, change a number to another in the same cell, or delete a number from a cell. After editing, then click the "calculate" button.

For extensive edit or to use the JavaScript for a new set of data, then use the "clear" button.

Age of Equipment 0 1 2 3 4 5 6 7 8 9 10 11 12 13
$ Resale Value
$ Running cost in Previous Year
Age of Equipment 14 15 16 17 18 19 20 21 22 23 24 25 26 27
$ Resale Value
$ Running cost in Previous Year
The Replacement Optimal Age and Its Average Cost:

For Technical Details, Back to:Decision Making in Economics and Finance

Kindly email your comments to:Professor Hossein Arsham

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