Optimization techniques applied in vehicles replacement period: a case study of BRTC public buses

Abstract

Bangladesh Road Transport Corporation (BRIC) is a large organization in Bangladesh that buys new vehicles and then leases them to a serIes of customers who choose for long or shotHerm contracts. So that the company cams high rale of returns on their leased cars during the life of the buses, Therefore, operating system of the vehicles and its maintenance in Bangladesh is an extremely important servicing activity of the Bangladesh Road Transport Corporalion (BRrC), In this study Optimization techniques are applied for the replacement period of BRIC buses. For this reason three models arc used, namely Dynamic Programming model (DP), Net Present Value (NrV) and lnlomal Rate of Return (lRR) model for analyzing the replacement period of the Bangladesh Road Transport Corporation (BRIC) bus by using secondary data. In order to find OUlthe replacement period of the bus, the data are collected from BRTC, Motijeel head office ilnd from the BRIC branch office, which is situated in Kallyanpur, Dhaka. B} analyzing the abovementioned models, DF model is appropriate for the replacement period of BRIC blls becallse thc salvage value of the bus is not considered in the other two models. From DP model, it has been shown that the BRIC bus should be replaced after approximately 13 years or total 1540200 kilometers of operation othef\vise the company will fall in losses. But according to NPV and IRR criterion, the bus would be replaced after approximately 20 years or lotal 2312000 kilometers of operation. But the objective of this sludy is to explore how many years of the BRIC ""ill be going on with maximizing their profit. For this reason, the data are collected from diffcrenl BRIC offices. Finally, it is eoneluded that DF model is acceptable for the replaeement period of BRIC bus.