Binary Integer Algorithm for Solving Capital Assets Replacement Problem

Public transportation companies using buses as their main resource of gaining profits. Such buses wear out with due course of time due to continuous use and need to be replaced. Even if maintained properly, they eventually need to be replaced. At a certain point in time, maintaining a bus costs more than acquiring a new replacement bus.Replacement decision is one of the decisions that must be carefully analyzed. They carry prime importance to maintain and enhance a company’s efficiency. This is mandatory due to the competition between transportation companies to occupy more and more share in the transportation market. This paper objective is to introduce a proposed model for the buses replacement policy based on the concept of integer programming. A real-life replacement problem study reveals the optimum replacement time for 5 buses belong to a public transportation company.