11. A machine shop has a press which is to be replaced as it wears out. A new press is to be installed now.

Further, an optimum replacement plan is to be found for the next 7 years after which the press is no longer required. The following data is given:

Find an optimum replacement policy and the corresponding minimum cost.

Transcribed Image Text:

Year Cost of installing a new press at the beginning of a year (Rs) Salvage value at the end of year (Rs) Operating cost during the years (Rs) 1 200 100 60 2 210 50 80 3 220 30 100 4 240 20 120 5 260 15 150 6 290 10 180 7 320 0 230