Equipment Replacement Analysis: A Literature Review and Directions for Future Research

Replacing equipment is an important decision that nearly all entities must face, generally motivated by rising operating and maintenance costs of current assets or the technological advances of available assets in the market. The problem has been studied for nearly a century. In this article, we survey single and multiple asset solution approaches under a variety of settings, including technological change, variable utilization, tax, and various uncertainties. Furthermore, we illustrate a number of open problems that are worthy of future study.