Parallel machine replacement with shipping decisions

Abstract

In this research, the Parallel Machine Replacement Problem is adapted to include shipping decisions between demand sites. The formulation arises from an application in the construction industry, where the shipping of assets is vital. The benefit of including shipping decisions with replacement analysis is presented in a numerical example where heavy machinery is considered. The formulation is shown to significantly increase in computational complexity as the number of demand sites increases, and therefore an efficient heuristic algorithm is presented to solve large-size problems. Managerial implications are derived from sensitivity analysis on the shipping cost-per-mile, and economic impact is discussed. It is shown that the optimal solution does not change even when shipping cost inflates significantly.