Problems in the Application of Replacement Theory

A great deal of time and effort has been devoted to the development of quantitative methods for the solution of business management problems. Unfortunately, a tremendous difference exists between the rate at which these methods are being generated and the rate at which they are being applied. This suggests that there exist problems of application which industry is not able to overcome. The purpose of this paper is to present and analyze the difficulties encountered in a single, but representative, area of decision-making, namely, equipment replacement. It is hoped a presentation and analysis of these difficulties will have some effect on the nature of future research activities.