Abstract
This paper presents a method of economy study on equipment replacement problem using "cost of extending the life." The cost mentioned consists of additional operation cost and opportunity loss of disposal income caused by one year extension of equipment utilization. Representing the value of "cost of extending the life" of each year on a graph makes it possible to easily judge the most economical point of time of replacement, and it also helps decide replacement policy under circumstances with future uncertainties of operation and maintenance cost and investment cost, or when appearance of advanced equipment is expected in the near future.
