ABSTRACT
Replacement problems arise where equipment, or some facility, tends to fail or deteriorate as it grows older. To a large extent, problems of replacement have been neglected in industry, and although some particular studies are made relating to individual items of plant or transport, it is rare to find a systematic application of replacement theory to the total resources employed by a company. The long-term nature of many replacement problems means that the subject can often be regarded as a component of corporate planning studies. The interest being shown by managers should automatically stimulate a greater interest and activity in the problems of replacement. The graph illustrates that for the straight-line case the minimum figure of average annual costs occurs when the capital cost and repair costs are equal. A similar mathematical analysis to the simple lamp example may be applied to companies’ staffing problems.
