6.2 - Cost Components in Replacement Analysis
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Practice Questions
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What does inflation cost refer to?
💡 Hint: Think about how money value changes over the years.
Why is downtime cost important?
💡 Hint: Consider the effect of a machine being in repair.
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Interactive Quizzes
Quick quizzes to reinforce your learning
What is the primary focus of downtime cost in equipment management?
💡 Hint: Think about what it means for production when a machine is in repair.
True or False: Inflation reduces the purchasing power of money over time.
💡 Hint: Remember how goods and services cost more over the years.
1 more question available
Challenge Problems
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An excavator originally purchased for 20 lakh rupees is now experiencing decreasing productivity due to frequent repairs and an increasing cost for maintenance. Calculate the potential obsolescence cost if newer models offer greater efficiency and lower costs.
💡 Hint: Look at how many more rupees you would need for repairs versus the savings from new models.
Create a cost analysis model that weighs the impact of inflation, downtime, and obsolescence on a fleet of machinery. Justify your reasoning.
💡 Hint: Think about how these three factors would interrelate over a five-year period.
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