Enterprise equipment management, replacement economics and value creation

This paper deals with a study for determining cut-off limits for equipment replacement in a company as using existing equipment beyond this limit may not be cost-effective. It reports the case for replacement economics of photocopying machines in the company with the help of a suggested methodology after quantifying all fixed and variable costs. In this paper based on operations of the photocopying machine, it has been attempted to determine cut-off limits for equipment replacement and presenting all computational details, and interpreting optimum period for equipment replacement as one that may lead to value creation for the company in view of reduced maintenance expenses, and higher productivity with novel machine features at less costs.