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LSG Manufacturing has a large, expensive piece of machinery that is vitally important to their business. Any equipment needs maintenance and repairs and those costs
LSG Manufacturing has a large, expensive piece of machinery that is vitally important to their business. Any equipment needs maintenance and repairs and those costs increase as the equipment gets older. The LSG's machine is currently 2 years old and so they are planning the 10-year replacement schedule for the machine. Purchasing a new machine at any point costs $150,000, but the old machine can be sold to offset that cost. It costs an additional $5,000 to replace the machine in lost productivity, moving costs, etc. LSG can buy new machines at the beginning of any of the next 10 years. Formulate a linear program to determine when LSG should buy new machine(s) in order to minimize the total cost of ownership of this machine for the next 10 years. LSG Manufacturing has a large, expensive piece of machinery that is vitally important to their business. Any equipment needs maintenance and repairs and those costs increase as the equipment gets older. The LSG's machine is currently 2 years old and so they are planning the 10-year replacement schedule for the machine. Purchasing a new machine at any point costs $150,000, but the old machine can be sold to offset that cost. It costs an additional $5,000 to replace the machine in lost productivity, moving costs, etc. LSG can buy new machines at the beginning of any of the next 10 years. Formulate a linear program to determine when LSG should buy new machine(s) in order to minimize the total cost of ownership of this machine for the next 10 years
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