A 0-1 LINEAR-PROGRAMMING FORMULATION FOR SOLVING AN EQUIPMENT REPLACEMENT-PROBLEM

We formulate a deterministic equipment replacement problem (which is normally solved through the use of dynamic programming) as a 0-1 linear programming problem. The advantage of such a formulation is that it does not require a high degree of expertise, insight or 'art' (i.e. it is thus rather easily understood by practitioners), does not suffer from the so-called 'curse of dimensionality', a short-coming of dynamic programming, and can always yield optimal solution to fairly big sized problems using available software. A numerical example is solved on a personal computer and interpretation of the results is provided.