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Making Equipment Replacement Decisions
PAUL D TOMLINGSON
Competition among industries has become globally oriented. Thus, every industry will be examining how they can become more profitable. Increasing the productivity of equipment will be among the logical steps. In turn, older, less productive equipment will be replaced. Modern production equipment will be expensive as well as more complex. Thus, as new capital outlays are considered, there must be more careful consideration than ever before. The singular economic approach to replacing equipment involving primarily accounting personnel must give way to a company team approach. To assure that the best equipment for the job at the best price is purchased, economic as well as performance considerations must be weighed. Maintenance is especially sensitive to this requirement since the new equipment is likely to have many new technological advances that will make it more difficult to maintain. Thus, new maintenance techniques must be introduced and maintenance personnel must be properly trained in applying these techniques. Therefore, plant managers should provide policies that ensure each department recommends features of the new equipment that impact performance and maintenance. Although decisions must embrace performance and maintenance, acquisition cost and long term capital expenses remain an important ingredient. Then, as team decisions are made, there will be better assurance that the right choices are made and that the equipment will effectively support the productivity and profitability requirements of the future