A Company Wants to Determine the Optimal Replacement Policy for Its

Essay

A company wants to determine the optimal replacement policy for its delivery truck. New trucks cost $30,000. The company does not keep trucks longer than 2 years and has estimated the annual operating costs and trade-in values for trucks during each of the 2 years as:
$\quad$$\quad$$\quad$$\quad$$\quad$$\quad$$\quad$$\quad$$\quad$$\quad$$\text { Age in years }$
$\begin{array}{l}\begin{array} { l c c } & 0 - 1 & 1 - 2 \\\hline \text { Operating Cost } & \$ 15,000 & \$ 16,500 \\\text { Trade-in Value } & \$ 20,000 & \$ 16,000\end{array}\end{array}$ Draw the network representation of this problem.