Parallel machine replacement

The authors consider the parallel replacement problem in which there are both fixed and variable costs associated with replacing machines. Increasing maintenance costs motivate replacements, and the fixed replacement cost provides incentive for replacing machines of different ages together in ‘clusters.’ The authors prove two intuitive results for this problem. First, it is never optimal to split a cluster of like-aged machines, and second, it is never optimal to replace newer clusters before older clusters. By incorporating these two results into an algorithmic approach, the amount of computation required to identify an optiaml replacement policy is vastly reduced.