4.2. Replacement Decision

Try these first

1. 1.

   What is the first phase in the equipment life cycle?

   Hint

   Think about the starting point of using any equipment.

2. 2.

   Define downtime in relation to equipment.

   Hint

   Consider the time not spent working effectively.

3. 3.

   What is the economic useful life of equipment?

   • The entire life of the equipment
   • The time when it costs most
   • The time with minimized costs and maximized profits

   Hint

   Focus on when costs versus profits are optimized.

4. 4.

   True or False: Downtime is a critical factor that does not affect equipment costs.

   • True
   • False

   Hint

   Think about what happens in projects when equipment isn't working.

5. 5.

   A construction company has a bulldozer that's 10 years old. It's in a market where bulldozers are often upgraded every 5 years. If the repair costs each year are escalating and last year reached 40% of its original purchase price, analyze the decision to keep vs. replace.

   Hint

   Evaluate repair costs versus productivity levels.

6. 6.

   A firm is using an old crane that frequently delays projects because of downtime. Calculate the total cost of downtime over six months if every month it leads to a production delay that costs the firm $2000.

   Hint

   Consider how much new equipment could save in project delivery times.