A mixed-integer programming approach to the parallel replacement problem under technological change

The parallel replacement problem under economies of scale (PRES) determines minimum cost replacement policies for each asset in a group of assets that operate in parallel and are subject to fixed and variable purchase costs. We study the mixed-integer programming formulation of PRES under technologi...

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Bibliographic Details
Published inInternational journal of production research Vol. 54; no. 3; pp. 680 - 695
Main Authors Büyüktahtakın, İ. Esra, Hartman, Joseph C.
Format Journal Article
LanguageEnglish
Published London Taylor & Francis 01.02.2016
Taylor & Francis LLC
Subjects
Cutting
cutting planes
Economics
Gain
Inequalities
Integer programming
Mathematical models
Minimum cost
mixed-integer programming
Optimization
parallel equipment replacement
Programming
technological change
US Postal Service (USPS) fleet management case
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ISSN0020-7543
1366-588X
DOI10.1080/00207543.2015.1030470

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Summary:The parallel replacement problem under economies of scale (PRES) determines minimum cost replacement policies for each asset in a group of assets that operate in parallel and are subject to fixed and variable purchase costs. We study the mixed-integer programming formulation of PRES under technological change by incorporating capacity gains into the model such that newer, technologically advanced assets have higher capacity than assets purchased earlier. We provide optimal solution characteristics and insights about the economics of the problem and derive associated cutting planes for optimising the problem. Computational experiments illustrate that the inequalities are quite effective in solving PRES under technological change instances.
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ISSN:0020-7543
1366-588X
DOI:10.1080/00207543.2015.1030470