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DaniD Car Rental is developing a replacement policy for each car in its fleet during a 3-year cycle. For each car in the fleet, we
DaniD Car Rental is developing a replacement policy for each car in its fleet during a 3-year cycle. For each car in the fleet, we assume that DaniD Car Rental must purchase a car at the beginning of each 3-year cycle. At the start of each subsequent year, a decision can be made regarding whether to keep the car or to replace it with a brand new car. Each car has to be in service for at least 1 year. The cost of a brand new car at the beginning of each year, the maintenance costs from year to year, and the trade-in values are shown below. Utilize a shortest path formulation to determine Danid Car Rental replacement policy. (Hint: Use the entries in the table below to compute arc weights similar to those of the equipment replacement example given in the posted material labelled 7-10-18a Wk12 Applications...) Year 1 Year 2 Year 3 Cost of brand new car $25,000 $20,000 $27,000 at the beginning of year One year maintenance cost for brand new car 1,000 1,100 1,200 paid at beginning of year One year maintenance cost for 1-year-old car NA 1,250 1,400 paid at beginning of year One year maintenance cost for 2-year-old car NA NA 1,500 paid at beginning of year Trade-in value of 1-year- 19,000 18,500 18,000 old car at the end of year Trade-in value of 2-year- NA 17,000 16,000 old car at the end of year Trade-in value of 3-year- NA NA old car at the end of year 14000 DaniD Car Rental is developing a replacement policy for each car in its fleet during a 3-year cycle. For each car in the fleet, we assume that DaniD Car Rental must purchase a car at the beginning of each 3-year cycle. At the start of each subsequent year, a decision can be made regarding whether to keep the car or to replace it with a brand new car. Each car has to be in service for at least 1 year. The cost of a brand new car at the beginning of each year, the maintenance costs from year to year, and the trade-in values are shown below. Utilize a shortest path formulation to determine Danid Car Rental replacement policy. (Hint: Use the entries in the table below to compute arc weights similar to those of the equipment replacement example given in the posted material labelled 7-10-18a Wk12 Applications...) Year 1 Year 2 Year 3 Cost of brand new car $25,000 $20,000 $27,000 at the beginning of year One year maintenance cost for brand new car 1,000 1,100 1,200 paid at beginning of year One year maintenance cost for 1-year-old car NA 1,250 1,400 paid at beginning of year One year maintenance cost for 2-year-old car NA NA 1,500 paid at beginning of year Trade-in value of 1-year- 19,000 18,500 18,000 old car at the end of year Trade-in value of 2-year- NA 17,000 16,000 old car at the end of year Trade-in value of 3-year- NA NA old car at the end of year 14000
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