Introduction to Management Science 12th Edition by Bernard Taylor

Exercise 14

A new police car costs the Bay City Police Department $26,000. The annual maintenance cost for a car depends on the age of the car at the beginning of the year. (All cars accumulate approximately the same mileage each year.) The maintenance costs increase as a car ages, as shown in the following table:
In order to avoid the increasingly high maintenance costs, the police department can sell a car and purchase a new car at the end of any year. The selling price for a car at the end of each year of use is also shown in the table. It is assumed that the price of a new car will increase $500 each year. The department's objective is to develop a car replacement schedule that will minimize total cost (i.e., the purchase cost of a new car plus maintenance costs minus the money received for selling a used car) during the next 6 years. Develop a car replacement schedule, using the shortest route method.