What is a replacement problem? Describe some important replacement situations and policies. Briefly explain the costs which are relevant to decisions for replacement of depreciable assets. Illustrate their behaviour and explain how the optimal time


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Rosie Normanton Profile
Rosie Normanton answered
A replacement problem could be any sort of problem relating to the replacement of something, whether this is an item, part or person. Important replacement situations could involve those in which something needs to be replaced quickly in order for necessary functions to take place, and one policy could be to replace various elements within a certain time period. The costs relevant to the replacement of something include the cost of the replacement item itself, and the revenue or profit replacing the item will generate. It may be necessary to make a decision about whether or not to replace something by considering whether there will be a financial gain overall.
  • Replacement parts
If a piece of machinery, or part of a machine, requires replacement, you will need access to replacement parts. This can be found by contacting the original manufacturer of the machinery; replacement parts may even be issued free of charge if you are under warrantee. Alternatively, you could look online for replacement parts. Many websites specialize in selling replacement parts at low prices and will deliver to locations across the USA. Make sure the replacement part you buy will be compatible with your current machinery item.
  • To replace or not to replace
When deciding whether or not to replace something, there are a number of elements to be considered. Firstly, consider the cost of replacement. Will this cost be worth it in the long run? It is important to not just think about things in the short term when it comes to costs. In addition, you should consider whether the loss of the item has impacted on functioning. For instance, if a staff member has quit, but you find that having one less employee is not that bad, replacement may not be necessary or desirable.

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