Development of Optimal Replacement Age Model for Differential Unit in Equipment Leasing System

Abstract

Essential equipment used for technical activities is quite expensive to make right for service and acquire with money. Investors sometimes derive several means of attending to this significant challenge for business to continue. The lessor lets the needed property or properties to the lessee through a known and acceptable lease contract. The contract terms also allowed the lessor to take charge of machinery maintenance for costlier tools. The importance of the lease in business activities can always be addressed. Hence, this study presents a reliability analysis and development of an optimal replacement age model for dump trucks, with particular attention to differential unit components. The trucks' age ranges from 10 to 21 years, and the mileage covers 100,000 to 160,000 km. Results show that the Mack model-2011 dump truck had a reliability of 0.9459 (95%) in 2018 and 0.8378 (84%) in 2020. The reliability of the Mack model-2002 was 0.9773 (98%) in the year 2020. Also, the estimated minimum annual maintenance cost was two million, eight hundred and sixty-six thousand six hundred and sixty-seven Naira during the sixth year, while the estimated mean cost was two million nine hundred and fourteen thousand two hundred and eighty-six Naira in the seventh year. This represents 1.63% higher than maintenance costs experienced in the sixth year. Therefore, machinery requires replacement every six years.