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Optimizing capital investments under technological change and deterioration: A case study on MRI machine replacement
- Source :
- The Engineering Economist. 62:105-131
- Publication Year :
- 2016
- Publisher :
- Informa UK Limited, 2016.
-
Abstract
- We study the multiple style and type parallel asset replacement problem (MST-PRES), which determines an optimal policy for keeping or replacing a group of assets that operate in parallel under a limited budget. Operating assets generally suffer from deterioration, which results in high operation and maintenance (O&M) cost and decreased salvage value, and technological improvements make it possible for new assets to operate more efficiently at a lower cost. In order to address these issues, we formulate a multi-objective mixed-integer programming (MIP) model that minimizes fixed and variable costs of purchasing new assets, O&M cost, inventory cost, and penalty cost for unmet demand minus salvage values, while considering technological advances and deterioration as a gain and loss in capacity, respectively. We apply our model to a case study involving two different styles of assets: a full-body magnetic resonance imaging (MRI) machine and a smaller extremity magnetic resonance imaging (eMRI) machine...
- Subjects :
- Economics and Econometrics
021103 operations research
Technological change
05 social sciences
0211 other engineering and technologies
General Engineering
02 engineering and technology
Asset (computer security)
Inventory cost
Purchasing
Variable cost
Education
Reliability engineering
Order (exchange)
Capital (economics)
0502 economics and business
Economics
Lower cost
Operations management
050203 business & management
Subjects
Details
- ISSN :
- 15472701 and 0013791X
- Volume :
- 62
- Database :
- OpenAIRE
- Journal :
- The Engineering Economist
- Accession number :
- edsair.doi...........359c85ff514900a7588809a1675178e3