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In this paper a model of simultaneous planning of capacity expansion and equipment replacement is presented using mathematical modeling and analyzing investment, financial and operational criteria.
Since the long range operational strategies of different organizations are due to considerable and irretrievable costs, therefore the process of decision making for plans of capacity expansion and equipment replacement is a complex task that the industrial firms are confronted with.
The resulting model is a mixed integer programming (MIP) consisting of binary (0, 1) and continuous variables. The above model is a complex and large scale and therefore its analysis is so difficult or even impossible, using the classical and conventional methods. Consequently, based on hybrid genetic algorithm, a solution method is developed which is designed by considering the characteristics of the above mathematical model.
Finally, the results from the mathematical model are compared with the results from the presented genetic algorithm, in order to evaluate the validity and performance of the proposed method. Moreover, a real case study is presented and analyzed by the proposed method.