Date of Award

12-1995

Degree Name

Master of Science

Department

Industrial and Manufacturing Engineering

First Advisor

Dr. Frank Wolf

Second Advisor

Dr. Bob White

Third Advisor

Dr. Richard Munsterman

Access Setting

Masters Thesis-Open Access

Abstract

The study determined if accuracy of estimation of retirement price of industrial equipment was affected by using a cumulative average pricing (CAP) method at varying conditions of inflation rate, service life, and life characteristics. The study also determined the accuracy of estimating the average life of unaged data by simulated plant record (SPR) method. Thirty-six experiments were conducted at varying conditions of inflation rate, curve type and average life. The study was conducted for two left modal curves, two symmetrical modal curves and two right modal curves at 20 and 40 years average life using three different inflation rates: 3%, 6%, and 9%.

The findings indicated that there is significant error in calculating the retirement price using CAP at high inflation rates. The SPR method can be used to approximate the life characteristics and average life of unaged data.

It was concluded that CAP method may be used to estimate the retirement price of unaged data when the inflation rate is less than 3%.

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