ch2

ch2.md

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+Equipment Replacement
+=====================
+
+The Simplest Model
+------------------
+
+* In `N` time periods, we originally have a machine with age `y`. `c(i)` is the cost of operating a machine with age `i`; `p` is price of a new machine; `t(i)` is trade-in value for machine with age `i`; `s(i)` is the salvage value of machine with age `i` at the end of `N` time periods.
+
+* The problem is to minimize the total cost during the next `N` time periods.
+
+Dynamic-Programming Formulation
+-------------------------------
+
+* The optimal value function is trivial and left as exercises.
+
+Shortest-Path Representation of the Problem
+-------------------------------------------
+
+* Use _age of machine_ as y-axis and _time_ as x-axis, we can represent the problem as a shortest-path problem.
+
+Regeneration Polnt Approach
+---------------------------
+
+* **TODO**
+
+More Complex Equipment-Replacement Models
+-----------------------------------------
+
+* Added the third choice between "keep" and "replace": "overhaul".
+
+* And other variants in exercises.