The parallel replacement problem determines minimum cost replacement schedules for each individual asset in a groupof assets that operate in parallel and are economically interdependent. Economic interdependence arises as a result ofeconomies of scale, such as a fixed charge in any period in which an asset is purchased. In this paper, we considerthe parallel replacement problem under technological change and deterioration and provide its integer programmingformulation. Our model incorporates technological change as a gain in capacity, while deterioration is considered bothin terms of loss in capacity, increased operating and maintenance costs (O&M) costs and decreased salvage values.We illustrate how technology and deterioration affect the optimal replacement policy and give some insights about theproblem.
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