Multiple Options in Parallel Replacement Analysis: Buy, Lease or Rebuild

An integer programming model solving the demand constrained finite horizon parallel replacement problem with homogeneous assets is presented here with asset purchases, leases and rebuilds as viable replacement options. The model minimizes the purchase, operating, maintenance and salvage costs of a fleet of assets while meeting demand requirements. The formulation is adapted to handle both capital and expense rationing constraints. Computational experience with real sized problems in the transportation industry is discussed and small examples are provided for illustration.