Consider the following equipment replacement model. A company is planning its equipment policy for the next six years. C_i,j is the cost of buying the equipment at the beginning of the year i and selling it at the beginning of year j. No equipment can be kept more than three years.

Find the best replacement policy if:

C_1,2= 1800

C_1,3= 2400

C_1,4= 3700

C_2,3= 1900

C_2,4= 3300

C_2,5= 4700

C_3,4= 4000

C_3,5= 3200

C_3,6= 3000

C_4,5= 1800

C_4,6= 2200 and

C_5,6= 1700

How much better is this policy than the second-best and third-best methods?