| Abstract: | A recent article in this journal outlined strategies for the replacement of components and sub-assemblies when considering hazard rates and for capital intensive equipment when considering influences such as increasing maintenance costs, inflation, discount rates, and depreciation. We expand upon this second analysis, concerning the replacement of capital intensive equipment with net present value (NPV) analysis, by guaranteeing that all feasible options are evaluated when determining the optimal strategy. This requires assumptions about future challengers (potential replacement equipment over time) and the time horizon for analysis. We illustrate different solution approaches based on the given assumptions. |
