MAXIMIZING PROFIT THROUGH REPLACEMENT OF FACILITIES THAT DETORIATES WITH TIME (TIME SERIES)

SUMMARY 

In this paper, we demonstrate how the replacement model can be applied to determine the appropriate time to replace depreciating equipment, a model that covers item whose maintenance and repairing costs increase with time taking changes in the value of money to be 10% (i.e. either inflation or deflation) during the period under study. From the analysis, it was revealed that at 21st year of using the generating plant, minimum average annual cost (min 197.3135) is obtained. This implies that it would have been economically o.k., if the Electrical Generating plant at 7up Bottling company PLC Benin, Oluku, Edo Nigeria. has been removed and replaced after Twenty one years of its usage.

The analysis presented in chapter four shows that the minimum average annual cost is N 197,313,500, this is revealed during the 21st year of using the generating plant. Hence, the generating plant should be replaced after 21 years of its usage