Chapter 12. Replacement and Retirement Decisions
A replacement decision is a special case of the for-profit decision analysis technique presented in Chapter 10. Replacement decisions happen when an organization already has a particular asset and they are considering replacing it with something else, such as deciding between keeping a legacy software system and redeveloping it from the ground up. Replacement decisions use the same decision process as was presented, but there are additional challenges that complicate the decision analysis: sunk cost and salvage value. Retirement decisions are about getting out of an activity altogether, such as when a software company considers not selling a software product any more, or a hardware manufacturer ...
