Keep, Overhaul or Replace: Machine Decision Sheet

How to read this sheet

Options that buy different numbers of years cannot be compared on total cost, and dividing each total by its own life is not a fix because money has a time cost. Each option is reduced to the annual figure it is equivalent to over the life it actually buys, using the standard capital recovery treatment, and a salvage received at the end is credited through a sinking fund rather than deducted from a sum paid today. The written-down value is entered and then appears in no calculation: it is money spent in a previous year that no decision taken now recovers, and the only legitimate way the old machine enters is the resale somebody will pay for it today. Change that input and watch the recommendation not move; that is what it is there for. Efficiency is valued at the contribution a running hour earns at full efficiency, so a machine delivering less earns less every hour it runs - usually a larger figure than the maintenance it saves, which is why a case built on rising repair bills understates itself. Running hours are the hours the machine is scheduled and not the hours it is owned: an option that runs fewer hours because the mill is short of orders should carry that in the hours, not in the efficiency. Nothing here models a machine that fails catastrophically before its stated life, the working capital a new machine releases through lower waste, the training and settling period after an installation, or the value of being able to take work the old machine cannot hold quality on - the last of which is often the real reason to replace and is not a number this sheet can produce.