ABSTRACT
Once a piece of equipment is purchased and used, it eventually begins to wear out and suffers
mechanical problems. At some point, it reaches the end of its useful life and must be replaced.
Thus, a major element of profitable equipment fleet management is the process of making the
equipment replacement decision. This decision essentially involves determining when it is
no longer economically feasible to repair a broken piece of machinery. Thus, this chapter
presents the three components of the economics of equipment management decision making:
. Equipment life: Determining the economic useful life for a given piece of equipment
. Replacement analysis: Analytical tools to compare alternatives to replace a piece of
equipment that has reached the end of its useful life . Replacement equipment selection: Methods to make a logical decision as to which alter-
native furnishes the most promising solution to the equipment replacement decision.
