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Chapter 9
Chapter 9
which simplifies to
Then, integrating (9.3), we find
and hence
which simplifies to
for all j 1.
subject to
and
respectively.
Let be the net return (net of necessary maintenance)
of a machine purchased in period s and operated in
period s . we assume
where
This means that the return in period k on a machine
purchased in period s goes down by an amount ds
every period between s and k, including s, in which
there is no preventive maintenance. This decrease can
be offset by an amount proportional to the amount of
preventive maintenance.
Note that the function is assumed to be stationary
over time in order to simplify the example.
Let be the salvage value at time k of a machine
purchased at s. We assume
The incremental salvage value function is given by
where
and
so that
This implies that
Now,