A study of replacement rules for a parallel fleet replacement problem based on user preference utilization pattern and alternative fuel considerations

Parallel fleet replacement problems deal with determining an optimal replacement schedule that results in a minimal total cost of owning and operating a fleet within a finite planning horizon. In this paper, the fleet consists of service vehicles, varying in age and cumulative mileage, commonly owned by government agencies or private business organizations. The paper focuses on three main aspects of the problem, including the effects of some widely used replacement rules, consideration of alternative fuel vehicles for replacement, and a new “user preference” utilization pattern. The vehicle replacement rules under study include purchase-new-vehicles-only, no-splitting-in-selling, one-purchase-choice, older-vehicles-selling, and all-or-none rules. The initial fleet consists of gasoline vehicles, while alternative-fuel vehicles using either compressed natural gas (CNG) or liquefied petroleum gas (LPG) are included as challengers in every replacement decision period. The user preference utilization pattern denotes a pattern in which yearly usage of vehicles declines as the vehicles grow older or have higher cumulative mileage. Integer programming formulation of the defined problem that incorporates these new factors is provided. Small numerical examples under various scenarios and a large problem instance with model parameters estimated from actual data are solved to optimality to gain some insights about the replacement rules and other considered factors.

► We study effects of replacement rules for fleet replacement problem.
► User preference utilization and alternative fuel are considered.
► Cost effective rules: one-purchase-choice, sell older first, and sell in cluster.
► Buy-new-only is non-economical; consider buying some young used vehicles instead.
► LPG-vehicles are more economical than CNG- and gasoline-vehicles.