Optimal sustainable vehicle replacement model

In this paper, we propose a replacement decision model for a truck, which takes into account both economic aspects of the vehicle and the amount of emission released during its use phase. From an economic perspective, we consider the truck´s acquisition, fuel and maintenance costs, and the resale value. For the emission consideration, we calculate the amount of CO₂ produced based on the estimated vehicle´s miles traveled, emission factor, and fuel use. The latter is a function of the fuel economy, which depends on the truck´s model year and its current age. We consider a finite planning horizon and develop an optimal replacement policy based on dynamic programming (DP). From the model, we obtain the optimal annual cost limits (ACLs) for a truck with a certain age at the beginning of a year assuming that the truck still needs to operate over the remaining planning horizon. The optimal ACLs minimize the sum of the economic and emission related costs in the model. At the end of each year, according to the optimal ACLs, we determine whether to replace or repair the truck. We repair the truck if the estimated total cost of maintenance, fuel and emission for the upcoming year does not exceed the ACL, and replace it immediately, otherwise. The truck is disposed at the end of the planning horizon. We will present the application of the proposed model as a case study, and compare our results with the results of the model in which no environmental consideration is considered. The comparison reveals that the latter recommends more repair as the optimal decision; while our model more recommends that the total cost should be compared with the cost limits to choose the optimal repair/replacement decisions.