Appraisal of Optimum Economic Life for Farm Tractor: A Case Study

V. Pagare
Journal article Economic Affairs • Март 2019 Индия

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(English, 8 pages)

Abstract

Agricultural equipment gets deteriorated mechanically and their functionality decreased with time and usage. In order to manage such equipment, it requires higher operating and maintenance cost, as a result of this, there is a need to replace them. Decision making about the replacement of used farm equipment with a new similar one is one of the important aspects of farm machinery management. Based on that criterion, the objective of the investigation was decided to estimate the economic operational life of tractors in the central region of Madhya Pradesh, India and to evaluate the effect of different parameters on economic life, which would add value to the profitable management decision. The tractor data collected were from government agricultural centres in the different regions of M.P. and categorized them into different groups based on their horsepower rating. Considering the preventive replacement policy the total annual average costs of tractors were estimated taking account into the repair cost and depreciation cost. The time period (in year), when the total annual average cost touched its minimum value, was decided as the economic life of a tractor. There is a negative correlation (r= -0.835) found between size (HP) of tractors and their economic life. And an empirical relation based on multiple regression analysis has been generated to predict the economic operational life of a tractor using per unit repair cost and annual usage (hours) as variables.

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Economic Affairs

Economic Affairs, Quarterly Journal of Economics, is a Peer-Review publication based on multi-dis... see more