Abstract for: A System Dynamics Model For Replacement and Overhaul Policy For Capital Asset Subject To Technological Change
Capital asset replacement has a significant effect on company cash flow, since the investment on new asset is expensive. Overhaul policy can extend the optimal service life of an asset, and results in lower total life cycle cost of an asset. Technological change also affects the life cycle cost and optimal service life of an asset. In this paper we examine the replacement/renewal and overhaul/refurbish policies in a combination under technological change. We used System Dynamics model and simulate hypothetical data for 4 cases, and the output is in line with some previous studies using analytical models.