Here is a real-world problem currently being discussed at my current practice.

Our C-arm (a video x-rays machine used for procedures)has broken.There are limited parts available to fix it as the model was discontinued.

The x-ray company gives you the following options.

1.) repair the current unit with used parts for $6000

2.) replace the unit with a used one for $5000, keeping the current unit for spare parts.

3.) buy a new machine for $8500 (parts not interchangable)

Assumptions: the broken unit has no salvage value, the insurance company pays the same amount for the procedure regardless of which unit is used.

The practice currently does 250 procedures per year.With the old unit repaired, the lifespan of the unit is 3 years.The used unit is 5 years, but the spare parts from the old machine will extend its life to 7 years.The new unit is 10 years.Assume regular maintenancecosts are equal for all three options.

Which is the best decision?