Consider the Equipment Replacement Problem Presented in the Chapter

question 42

Multiple Choice

Consider the equipment replacement problem presented in the chapter. Recall that in the network model formulation of this problem a node represents a year when the equipment was purchased. An arc from node i to node j indicates that the equipment purchased in year i can be replaced at the beginning of year j. How could the network model below be modified to depict an equipment purchase in year 4 and operating costs only through the remainder of the planning window?

• A) Modify the cost on arc 4-5 to account for only operating costs.
• B) Add a second arc 4-5 to represent just the operating costs.
• C) Add a dummy node, 6, so that arc 4-6 represents just the operating costs.
• D) Add a dummy node, 6, so that arc 4-5 represents operating costs and 5-6 represents new equipment purchase.

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Definitions:

Sporting Goods

Products and equipment designed for participation in physical fitness and sports activities.

Monthly Electricity

The amount of electric energy consumed or billed over a one-month period.

Rent

The price paid for the use of property or land, typically on a periodic basis by tenants to landlords.

Average Total Cost Curve

A graphical representation that shows the average total cost of producing different quantities of a good.