An empirical excursion into the quicksand of vehicle replacement

The rapid increase of physical distribution costs relative to other categories has resulted in a renewed interest in the analysis of transport operations. One of the most common problems is that of vehicle replacement, and in this paper we present an analysis of real data. The methodology is developed paying due regard to the role of quantitative analysis in the decision-making process, and the sort of data which is readily available in most transport departments. A traditional discounted cost model is presented and this is followed by a productivity-based analysis, which is shown to be an improvement. The latter generates optimal solutions and is flexible enough to carry out considerable sensitivity analysis.