A fully subjective approach to capital equipment replacement.

Scarf, PA ORCID: https://orcid.org/0000-0001-5623-906X and Apeland, S 2003, 'A fully subjective approach to capital equipment replacement.' , Journal of the Operational Research Society, 54 (4) , pp. 371-378.

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Abstract

The timing of replacement of equipment is dependent on factors like replacement costs, discount factors and differences in productivity, reliability and safety of existing and new equipment. Predictions related to these factors are, however, normally subject to uncertainties, and in this paper we discuss how two subjective approaches to representing uncertainties related to future events—the classical Bayesian approach and the fully subjective approach—can be used as a basis for decision-making about replacement. Some key features of the approaches are discussed, including integration of engineering judgements, uncertainty treatment and type of performance measures to be used. In the fully subjective approach, we advocate the direct subjective assessment of uncertainty in a quantity of interest, which should be observable, with decisions made on the basis of this uncertainty. The fully subjective approach is illustrated using an example in capital equipment replacement.

Item Type:	Article
Themes:	Subjects / Themes > H Social Sciences > HD Industries. Land use. Labor > HD0028 - 0070 Management. Industrial Management Subjects outside of the University Themes
Schools:	Schools > Salford Business School > Salford Business School Research Centre
Journal or Publication Title:	Journal of the Operational Research Society
Publisher:	Palgrave Macmillan
Refereed:	Yes
ISSN:	0160-5682
Depositing User:	H Kenna
Date Deposited:	21 Aug 2007 14:11
Last Modified:	27 Aug 2021 21:59
URI:	http://usir.salford.ac.uk/id/eprint/278

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