U S WEST implements a cogent analytical model for optimal vehicle replacement

U S WEST implements a cogent analytical model for optimal vehicle replacement

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Article ID: iaor200397
Country: United States
Volume: 31
Issue: 5
Start Page Number: 65
End Page Number: 73
Publication Date: Sep 2001
Journal: Interfaces
Authors: ,
Keywords: production, inventory, computers
Abstract:

We developed and implemented a model-based replacement process for a diverse fleet of vehicles at U S WEST, a major telecommunications company (since June 2000, Qwest Communications International). The model considers relevant age-dependent factors, including annual maintenance cost, opportunity cost of downtime, depreciation, and salvage value. It assigns a replacement score to each candidate vehicle based on age, type, estimated replacement cost, and estimated maintenance cost in the next year of operation. The model then rank-orders the vehicles by score and identifies them for replacement subject to a budget constraint on fleet capital expenditure. Through implementation of the model-based process, the company expects an annual benefit of more than $13 million.

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