OPTIMUM REPLACEMENT LIFE OF LARGE SCRAPERS
DATA FOR A FLEET OF SCRAPERS WAS COLLECTED FROM A HIGHWAY CONTRACTOR AND ANALYZED, USING A MODIFIED VERSION OF THE DOUGLAS MODEL OF EQUIPMENT LIFE, TO DETERMINE THE OPTIMUM EQUIPMENT LIFE IN TERMS OF PRESENT WORTH OF PROFITS. APPLICATION OF THE MODEL INDICATED AN OPTIMUM LIFE (I.E., THE POINT IN TIME WHEN THE PRESENT WORTH OF PROFITS IS MAXIMIZED) OF TWO YEARS. THIS WAS MUCH SHORTER THAN THE ACCEPTED REPLACEMENT CYCLE OF THE GENERAL CONTRACTOR STUDIED. IT IS CLEAR THAT WHEN SUCH FACTORS AS THE TIME VALUE OF MONEY, OBSOLESCENCE, TAX EFFECTS, INFLATION, THE COST OF BORROWED MONEY, EXPECTED TECHNOLOGICAL IMPROVEMENTS IN FUTURE MACHINES, EXPECTED INCREASED COSTS OF FUTURE MACHINES, THE EFFECT OF MAINTNEANCE AND OPERATING COSTS, AND UTILIZATION ARE CONSIDERED OVER THE LIFE OF AN EQUIPMENT SPREAD, THE TIME TO REPLACE A GIVEN PIECE OF EQUIPMENT IS MUCH SHORTER THAN MIGHT BE INTUITIVELY EXPECTED. WHEN THE TOTAL ECONOMIC PICTURE OF MACHINE LIFE AND UTILIZATION IS CONSIDERED, EARLY REPLACEMENT (AFTER ABOUT TWO YEARS USE) RESULTS IN SIGNIFICANTLY HIGHER PROFITS TO THE CONTRACTOR FROM HIS SCRAPER FLEET. /AUTHOR/
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Supplemental Notes:
- Vol 97, No CO1, PROC PAPER 8000, PP 37-52
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Authors:
- Schrader, C R
- Publication Date: 1971-3
Media Info
Subject/Index Terms
- TRT Terms: Economic factors; Equipment replacement; Excavating equipment; Mathematical models; Present value; Profits; Service life
- Uncontrolled Terms: Models; Scrapers (Construction equipment)
- Old TRIS Terms: Economic considerations
- Subject Areas: Design; Economics; Highways; Maintenance and Preservation; Vehicles and Equipment;
Filing Info
- Accession Number: 00219425
- Record Type: Publication
- Files: TRIS
- Created Date: May 16 1971 12:00AM