Equipment replacement policy: a survey.

Abstract

Over the past ten years there has been a considerable increase in application of theoretically correct measurement methods in determining the economic life of equipment. Approximately 89% of the firms surveyed have equipment replacement policies. The discounted rate of return method is the most widely used in determining the service life of equipment; the MAPI formula is not widely used. Difficulties in applying a replacement policy can be classified into three groups: operational, organizational, and economic. The problems mentioned most often are operational. In organizational difficulties there is usually a lack of coordination between staff and line managers. Economic problems are generally the limited funds available for equipment replacement. Formal educational programs are lacking for the development of equipment replacement managers. For the firms having replacement policies, individuals with engineering degrees are preferred over those in other disciplines for the management of the equipment replacement policy.