Académique Documents
Professionnel Documents
Culture Documents
Retention Strategies
Andrew K S Jardine
February, 2008
1
©A.K.S. Jardine
Life Cycle Model
maintenance
downtime
$$
operations
inventory
depreciation
Time
Source: H. Greene & R.E. Knorr, Managing Public Equipment, American Public Works
Association, Kansas City, 1989.
© A.K.S. JARDINE 2
Optimizing Fleet Replacement Decisions
• Technological Improvement
© A.K.S. JARDINE 3
Fleet Statistics
© A.K.S. JARDINE 4
Title: BEST ESTIMATE RESALE VALUES
Number of Years: 5
Acquisition Cost: 85000
Age of O&M Cost Rate for Trade-in EAC
Vehicle (In Today’s Cash Flow Value Best Year
Dollars) Discounting Highlighted
1 Year Old 29352 10% 60000
2 Year Old 45246 10% 40000
3 Year Old 52626 10% 25000
4 Year Old 53324 10% 20000
5 Year Old 42363 10% 15000
© A.K.S. JARDINE 5
DATA ANALYSIS:
Equivalent Annual Cost vs Age of Trucks
EAC - $$ (Thousands)
80
75
70
65
60
1 2 3 4 5
© A.K.S. JARDINE 6
Parks & Recreation Department: Dump Trucks
Determining Optimal Replacement Age for Municipal Dump Trucks
Bus Number
© A.K.S. JARDINE 10
Equivalent Annual Cost ($/year)
Equivalent Annual Cost (EAC)
Year of Service
Minimum EAC in year 13
© A.K.S. JARDINE 11
Interpretation of Results
© A.K.S. JARDINE 13
Repair vs. Replace
Cp,1 Cp,2 Cp,3 … Cp,T Ct,1 Ct,2 Ct,3 … Ct,n Ct,1 Ct,2 Ct,3 … Ct,n
Today
© A.K.S. JARDINE 14
The Result
Minimum
© A.K.S. JARDINE 15
The Life Cycle Cost Iceberg
Source: B.S. Blanchard and W.J. Fabrycky, Systems Engineering and Analysis, Prentice Hall, 1990
© A.K.S. JARDINE 16