VEHICLE REPLACEMENT POLICY IN SELECTED TRANSPORT COMPANIES IN EDO STATE: A DYNAMIC PROGRAMMING APPROACH

ABSTRACT
The managements of firms in the transport industry need to decide when and how to undertake vehicle replacement arising from their wear and tear, as well as deterioration that accompanies the use of these vehicles. This culminate in measurable operating and maintenance costs that significantly affect their performance, operation and profit. The objectives of this study were to ascertain the vehicle replacement policies, examine the prevailing factors that influence vehicle replacement policies in transport companies in Edo State as well as examine the implication of dynamic programming to vehicle replacement policy in transport companies in Edo State. The study was conducted using twelve (12) transport companies and data on three (3) Toyota Hiace buses from two different companies. Two dynamic minimisation models were used to evaluate the data to produce vehicle replacement policy. The results showed that maintenance and operating costs, deterioration, age and technology are principal determinants of bus replacement policies in transport companies in Edo State. In addition, transport companies in Edo State replace their vehicles when they attain 2 years of age, when they are involved in an accident and when there are factory defect. However, the result of dynamic programming showed that the 2-years fixed age replacement policy is not optimal. We therefore recommend that transport companies should review their 2 year fixed age replacement strategy in place and implement adequate and effective record systems that will help to capture and store relevant data.